Consolidation gives medical practices the option of combining their energies and facilities to serve patients better. There are all sorts of styles of consolidation, ranging from two doctors combining in a partnership to a large hospital acquiring a small facility. Deciding whether or not to consolidate one’s practice requires healthcare professionals to carefully weigh the pros and cons of the decision. Before any consolidation, there are several things to consider.
Since every consolidation is different, each one comes with its own unique advantages. When several small practices join together, they can make better arrangements with providers by buying in bulk or sharing the cost of purchasing equipment. Medical vendors are often more willing to make deals and provide additional services when they are getting the business of a bigger practice.
There are also cost savings associated with consolidating staff under a single system, since things like training sessions and wage management can be handled for multiple employees at a time. Furthermore, consolidated practices have advantages when it comes to finding patients. For example, a lab may get more business if they work with a doctor’s office who can direct patients to that lab for testing. With the better deals on purchases and the higher access to patients practices can choose to lower their prices, further benefiting patients.
With all these advantages, consolidation might seem like a great choice for any healthcare professional, but there are some potential pitfalls. Often, there are quite a few clashes when merging facilities. Questions like who is in charge and what staff reports to which building can lead to conflicts when everyone in the practice is not devoted to the consolidation. Concerns over dividing profits and allocating expenses may also lead to some disagreements. Even when everyone is on the same page, there is a lot of legal paperwork and agreements to handle that can discourage less serious businesses from merging with each other.
To ensure that a consolidation goes as smoothly as possible, all parties involved need to be clear about what they want to get from the consolidation. Taking the time to carefully discuss finances, management, advertising, and more can help all parties get on the same page with each other and build a strong practice.
This article was originally published at ViperEquityPartners.org.
