In light of recent health-care reform and reductions in reimbursement, more and more physicians are entertaining the possibility of selling their practices to a hospital. However, another potential suitor could include a sale to a large publicly-traded or venture-capital backed physician practice group. These Wall Street practice groups are usually created by the merger or acquisition of numerous smaller specialty practices, which then seek to leverage their greater purchasing and negotiating power to spread the cost of IT upgrades over a larger revenue base and expand the range of services offered to their patients.
To grow efficiently, institutionally financed practice groups will approach and negotiate with dozens or even hundreds of target physician practices at one time, with only 1 to 5 percent of targets actually being acquired. To assure that valuable time is not wasted, best terms are achieved or, if necessary, negotiations are terminated appropriately and efficiently, it is imperative for a selling group’s partners to be equipped to interface with a potential buyer’s transaction professionals. Merger and acquisition (M&A) specialists should be hired or contracted to run the acquisition program, providing an expertise that managing partners of most target practice groups do not have.
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