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    Successful practice mergers require commitment

    Thomas J. Ferkovic
    Q: I have been approached by another private-practice physician, who has suggested that we merge our practices. After looking at the overhead costs I incur each year to keep my practice open, I am seriously considering it. What do I need to know about mergers that might help me make my decision?

    A: In an economically challenging and competitive healthcare marketplace, it is becoming more difficult for many private physicians to survive on their own, especially in light of increasing regulations and skyrocketing overhead costs.

    Still, many doctors do not want to cross the line into hospital employment. A merger with another practice might be a solution to avoid hospital employment. If handled properly, a merger between two or more private medical practices can have benefits such as:

    • increased negotiating leverage with insurers, payers, hospitals, and suppliers;
    • more opportunities for joint ventures, partnerships and affiliations;
    • access to increased financial resources for capital expenditures and increased staffing needs; and perhaps most importantly,
    • the ability to provide more full-service care and continuity of care for patients.

    Change is not without its challenges, however. Mergers require all parties entering into the agreement to compromise with one another in many areas, whether it is working styles, practice management philosophies, staff development, or billing, to name only a few. Such issues likely will still come to the surface when the "honeymoon" period ends.

    Be sure to discuss such difficult issues as practice culture and mergers of information systems, employees, and management staff. Act as though you are starting a new practice and review every expense to determine if you truly need the employee, service, form, etc. Don't just do something because you've always done it.

    No merger is easy. To make one successful takes money, time, energy, and commitment on the parts of everyone involved.

    Answers to our readers' questions were provided by Thomas J. Ferkovic, RPh, MS, managing director, SS&G Healthcare Services LLC. Send your money management questions to
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