Building a Solid and Secure Future in Anesthesia
One look at a graph showing completed acquisitions of anesthesiology and pain practices over the past several years reveals an upward slope and a clear illustration of a marked trend within the specialty. Acquisitions have grown steadily, from three in 2009 to 37 in 2016. According to one source, anesthesia and pain practice acquisitions increased at a seven-year compound annual growth rate of 43 percent.
The trend does not appear to be slowing. Despite the number of transactions during this time, the larger national anesthesia companies indicate they still have substantial room for growth throughout much of the United States. While most of the acquisitions have taken place in the East, the large companies are looking to expand geographically in other parts of the country.1
This relatively recent national movement in anesthesia toward consolidation presents individual practitioners and groups with a complex set of questions as they consider their futures. Is selling to a large national company inescapable in an increasingly competitive marketplace? What are the options?
Our lead article, co-authored by Howard Greenfield, MD of Enhance Healthcare Consulting, and Jody Locke of Anesthesia Business Consultants, provides historical context and guidance. What can hospital-based practices learn from the national companies? Is becoming part of a large company the only way to remain viable, or can practices glean lessons from these big players and position themselves more competitively by adapting some tried and true approaches?
“To the extent that most anesthesia groups have existed to optimize collections and shareholder compensation, they have not been willing to make the kinds of investment in infrastructure and leadership necessary to facilitate growth and the development of new business lines,” contend Dr. Greenfield and Mr. Locke. The authors explore related issues, including the role of practice size and the importance of developing and fine-tuning a corporate strategy, “often the distinguishing feature between these large organizations and typical hospital practices.”
In a similar vein, regular contributor Will Latham of Latham Consulting Group offers perspective on the full range of options in Where Do We Go From Here? Choosing the Right Path in Turbulent Times. Mr. Latham considers the pros and cons of the spectrum of choices, including merging, hospital employment and selling. Like Dr. Greenfield and Mr. Locke, Mr. Latham extolls the necessity of strategic planning.
Regardless of where an anesthesia group chooses to go, building relationships with facilities remains an essential ingredient of security and success. Once primarily a way for hospitals to “shake things up,” often without actually making a change in anesthesia providers, the request for proposal (RFP) has come to signify a serious interest in evaluating whether another group might deliver greater value. Robert Johnson, MBA and Robert Stiefel, MD of Enhance Healthcare Consulting discuss the factors that motivate hospitals to issue an RFP and the signs that an RFP may be coming.
Mark F. Weiss, JD returns to this issue with advice for anesthesiologists on preserving hospital relationships and job security in light of the high CEO turnover rate. “Even if you’ve done everything right, you can’t be certain that the new CEO won’t disrupt the relationship,” he writes. An American College of Healthcare Executives survey showing a 2016 turnover rate of 18 percent among hospital CEOs underscores the need to have contractual promises from the current CEO in writing. Trust, but verify.
Lastly, Neda M. Ryan, Esq. zeroes in on an even more pressing type of security, i.e., the need to prepare for and protect against a ransomware attack, a serious and growing healthcare threat that could potentially put lives at risk. Ms. Ryan outlines steps to take if a ransomware attack occurs and how to protect your practice and meet the requirements of the Healthcare Insurance Portability and Accountability Act (HIPAA) related to electronic protected health information.
We’re looking forward to ANESTHESIOLOGY® 2017 in Boston, October 21-25 and hope to see many of you there. Enjoy the rest of your summer. With best wishes,
President and CEO
1 Haverford Healthcare Advisors, Anesthesiology Practice Acquisitions, January 2017. http://www.haverfordhealthcare.com/wp-content/uploads/2016/10/Anesthesiology-Practice-Acquisitions-January-2017.pdf