Don’t Get Bushwhacked: 10 Ways to Assess Whether a Practice Will Remain Independent

Practices that are balanced demographically with multiple generations are less likely to sell to private equity or a public company than practices that are heavily weighted with radiologists from the Baby Boom generation nearing retirement.



November 1, 2019

As radiologists-in-training emerge from residency to interview for partnership-track positions with private practices, they are burdened with a relatively new concern: What are the chances that the practice they are interviewing with will sell their radiology group to a corporate entity?  Unfortunately, this is a legitimate concern.

Stories are circulating in the marketplace about radiologists who have yet to make partnership when the practice is sold and are forced into yet another decision—uproot themselves and their families and look for a position with a new practice, or accept what is likely to be a reduced salary from a corporate owner with no big-dollar payout to soften the blow.

In an effort to help residents discern whether a practice is truly committed to independence, radiologists and executives from Strategic Radiology practices suggest using the following probes to assess whether a practice will remain independent.

1. Is the practice committed to remaining 100% physician owned?

Most private practices would not hamstring themselves with a contractual commitment to remain independent, but any practice leader with an ethical core would be compelled to divulge whether it is in serious discussions with a consolidator. Ask if the practice is committed to independence.

2. What is the demographic make-up of the practice? 

Practices that are balanced demographically with multiple generations are less likely to sell to private equity or a public company than practices that are heavily weighted with radiologists from the Baby Boom generation nearing retirement.

3. Is the practice the only significant player in community?

Consolidators seek markets where they can dominate in order to extract favorable contracts with hospitals and payors. Proceed with caution— ask if the practice is in discussions with a consolidator about a potential sale.

4. Is the practice unusually large?

Practices of significant size are more attractive targets of consolidators seeking rapid growth—proceed with caution— ask if the practice has committed by vote to independence.

5. Has the group had any major changes in covered sites/systems?

While minor changes occur continuously in larger practices, loss of a contract that represents a significant percentage of the group’s volume could impact its stability and therefore commitment to independence.

6. Is group ownership shared equally among all partners?

Tiers of ownership and contracts owned by one individual could enable a practice to pivot quickly to a sale that could be kept quiet until the final hour.

7. Does the group’s governance and composition exhibit diversity?

A group that seeks to be inclusive in its governance when it comes to age, ethnicity, experience, and gender is less likely to make a decision that benefits one (in this case) age bracket more than another.

8. Does the group have a sustainable strategy for overnight coverage?

Because this is a potential vulnerability, it is a good idea to find out if the practice is exploring opportunities to develop internal coverage locally.

9. Has the group sought to improve its market position through alignment with local, regional, or national organizations committed to independent practice?

Independent private practices with no interest in selling to a consolidator are well advised to align regionally, join a national coalition that supports private practice, such as Strategic Radiology, or start a managed services organization (MSO) to enhance its position in the marketplace.

10. Has the practice taken steps to ensure it can remain independent and prepared to compete with consolidators and corporate practices?

Health care is under pressure to reduce costs, improve quality of care, and demonstrate its value. Every practice needs a strategy to compete with the consolidators.

Strategic Radiology Residents & Fellows Open House at RSNA. If you are a resident or fellow and plan to attend the upcoming RSNA meeting in Chicago, join the Strategic Radiology independent private practices for drinks, hors d'oeuvres, and networking. Learn about job opportunities with private practices nationwide and why independence is important to early-career radiologists.  Click here for details.

 

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