With the continued evolution of the healthcare industry under the Affordable Care Act, many private practice physicians find themselves in situations where they are being removed from insurance panels due to exclusive contracts being executed with larger practice groups. This scenario has played out with several of my clients recently, and it is certainly a daunting situation to be in. That, coupled with the increased costs of running a solo practice, has caused many physicians to begin seeking new opportunities to do business. One such opportunity that presents itself to many, particularly in single specialty groups, is the formation of a “super group” practice.
When built effectively, the super group model enables physicians to retain some autonomy, while presenting new opportunities for revenue and cost savings. The primary benefit of the super group is the centralization of services like billing, human resources, accounts payable and information technology, and the ability to scale more efficiently. Super groups are typically set up under a single Tax ID for contracting and billing, and are generally able to negotiate better rates with insurance companies, as well as increasing opportunities to get on panels and become exclusive providers in the particular practice area where they serve.
Larger-scale operations also benefit from lower collective costs for business expenses like malpractice insurance, information technology, employee payroll and healthcare benefits, along with the ability to secure better pricing from suppliers for medical supplies.
Merging several practices together is not an easy task. Here are some key elements to consider for super group success:
Common Purpose and Shared Vision
To ensure the successful implementation of a super group, there should be a clear purpose for the merger that everyone understands and agrees to. Reasons typically involve making more money or, with the advent of the Affordable Care Act, not making less money. Transparency and trust are critical when multiple entities are involved. The team of physicians must be aligned, not only from a clinical perspective, but a philosophical one, as well.
Super Group Champion
A successful super group will be led by a champion, who is typically a physician or key executive who is well respected and willing to devote substantial time to the successful launch of the business (much of which is without pay). The ideal candidate for this role will be effective in engaging with other physicians to bring them onboard and keep communications flowing, and will also serve as the point person for the professional management team required to form the business component of the super group.
Professional Management Team
The goal of any merger must be to have a great start-up and seamless transition. Essential to achieving this goal is a team of experienced, knowledgeable professionals who will work in concert to develop a plan that emphasizes growth, stability and profitability. The focus of this team is to get the medical practice on the road to thinking and running like a business.
The critical areas of involvement are as follows:
Infrastructure – Legal and Accounting
Naturally, medical mergers must be carefully planned from a legal and compliance perspective, and it is important to select attorneys and accountants who specialize in corporate matters, health care law and health care accounting. They will provide the organizational framework for the entity.
The legal and accounting team is responsible for creating the budget and timeline, obtaining financing, and will work with other teams, such as operations and human resources, providing specialty services.
The operations team is responsible for setting up the systems and procedures for the new organization. This includes the set up of the revenue cycle (including the EHR) and accounting system.
Wile personnel policies and procedures will need to be written for the new entity, the HR team will need to survey offices pre-merger in order to assess staffing positions, levels, salaries and benefits.
Forming a super group is not a swift process; it can take up to a year or more to complete the transition. Depending on the size of your new group, it may also be helpful to bring in a consultant to assist with merger activities and manage all of the intricacies of the transition. There are many details to work out when bringing separate practices together to form a new entity, but laying the groundwork with a shared vision, a champion practitioner and an experienced professional management team will give you the power you need to make your super group a success.