We've talked on this blog before about the physician landscape and long story short: It's an increasingly diversified market. As other stakeholders partner with more and more independent groups, they can't take a one-size-fits all approach.
Blog: What independent physicians do (and don't) want from potential partners
In our experience working with physicians across this spectrum, we've identified the organizational factors that are important to know before you start working with a group. Here are our top four.
1. Level of integration
Bringing physicians together into a cohesive group is an evergreen challenge and will be for the foreseeable future as M&A activity in this market continues. It's important for other stakeholders to recognize that they'll work with independent groups who are at all phases of the integration process—ranging from collections of autonomous practices to unified regional medical groups.
Recommended action steps:
- Identify where the group is in the integration process
- Are decisions made independently by each practice or at the aggregator level?
- What has already been standardized? What still needs to be integrated? (e.g., technology platforms, purchasing, care protocols, etc.)
- Determine when to approach the group
- Where are they in the change management process? Do they have bandwidth for a conversation with you?
- Do you offer a solution that might aid in the integration process?
2. Governance and decision-making processes
While traditional private practices remain shareholder-owned and -governed, these models look different as independent groups become larger, and often corporate, entities. Stakeholders should understand group governance to identify the right people to engage and where decision-making power lies. Importantly, pay close attention to the role and influence of practicing physicians.
Recommended action steps:
- Identify group decision-making bodies (e.g., board, C-Suite, and committees)
- Who sits on each? Are they compromised of physicians or administrators?
- Which entity makes the decision you're bringing forward? (e.g., buying a product or service) Is there a specific person who will have the final say?
- Look at recent decisions to determine whose buy-in is needed
- Who are key influencers of the decision?
- Will you need to get buy-in from shareholders or practicing physicians? Will they fund any portion of the investment needed?
3. Revenue streams
As independent groups become more advanced, they're actively looking for ways to diversify their revenue streams beyond delivering care. Stakeholders should examine these strategies as an indicator of sophistication. Generally speaking, the more services and lines of the business, the more progressive the independent group.
Recommended action steps:
- Account for the organization's clinical services
- Which specialties does the group offer? Do they have in-house ancillaries? (e.g., imaging, lab)
- Which services are the most profitable? Where are they looking to grow?
- Determine other sources of revenue
- Do they participate in value-based contracts? How much revenue is tied to risk-based payments?
- Have they stood up a management services organization (MSO)?
4. Partnerships
In addition to the above internal characteristics, stakeholders must pay close attention to external relationships too. Independent groups are increasingly working with partners across the health care ecosystem including fellow independent groups, health systems, payers, life sciences companies, and more. Stakeholders should work to understand where they would fit in among existing partners.
Recommended action steps:
- Identify current partnerships
- Does the group already work with your competitors?
- What other key relationships might impact how you work together? (e.g., existing vendors, payer arrangements, health system partnerships, etc.)
- Refine your value proposition
- What do you offer that the group's existing partners don't? What might make you a less attractive partner? What does that mean for your value proposition?
- What are your and the independent group's goals for the arrangement?
