Hospitals

Hospitals report family & internal medicine practices remain top targets for acquisition

  Hospitals are continuing to aggressively snatch up smaller hospitals and physician practices, but a […]

 

Hospitals are continuing to aggressively snatch up smaller hospitals and physician practices, but a new survey suggests that physicians are even more actively looking to sell their practices.

In a survey of executives from 118 U.S. hospitals, nearly half had acquired a physician practice in 2012. Among those that did, 70 percent of executives reported that the physician approached the hospital looking to sell his practice.

Hospital M&A is not a new trend, although it has picked up considerably with the implementation of the Patient Protection and Affordable Care Act and the creation of accountable care organizations. But the fact that physicians are looking to get acquired suggests that the industry has passed a tipping point, where M&A activity has made it harder for those independent physicians who haven’t been scooped up to stay competitive with hospitals.

Hospitals are still actively looking to acquire, though. Behind having a physician approach the hospital, 58 percent of respondents whose hospital made a practice acquisition last year said it did so to build a competitive advantage, and just as many said it was part of a physician recruitment strategy.

The survey was conducted in the fall of 2012 by healthcare staffing company Jackson Healthcare in mostly small- and medium-sized hospitals in the Midwest and Southeast (PDF).

Slightly more than half of the respondents said they foresaw physician practice acquisition activity this year, with family practice and internal medicine as the primary targets, followed by primary care. Nearly one in three respondents said they planned to acquire a family care practice in 2013.

This was the first year Jackson Healthcare did this survey, so there are no past data to compare that with. The firm did, however, ask the executives surveyed about acquisition activity in 2012 and found that primary care doctors, particularly those in family medicine, internal medicine and OBGYN care, were the most often acquired practices.

With primary care physicians and specialists characterized as the backbone of coordinated care, that’s not surprising. It’s an interesting dynamic, though, as some physicians have expressed dissatisfaction with the bureaucracy of working under a hospital, for example being required to meet quotas for ordering tests. There’s concern, too, that hospitals have gained too much power over price setting.

Last year, a survey by Merritt Hawkins predicted that two-thirds of the nation’s doctors would be employed by hospitals by 2014.

 [Chart from Jackson Healthcare]

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