Medical practices today face numerous challenges as they seek to balance financial returns with growth in an increasingly competitive world. Among those challenges are declining revenue, reduced patient volume, increased competition from non-traditional providers, staff morale issues and changing consumer preferences post-COVID.
In the face of these challenges many medical practices find themselves at the crossroads, contemplating whether to pursue a sale to a health system, hospital or private equity group or to remain independent and implement an aggressive investment in organic growth. This blog will explore the tradeoffs associated with both options and shed light on the challenges each approach presents.
Acquisition Model
Joining forces with a larger entity can provide immediate financial stability, and returns for owners, access to increased resources, including dedicated marketing, information technology and human resources support, and increased negotiating power with insurers. At the same time, the acquired practice will see some short-term operational benefits such as shared back-end services, streamlined processes and the reduced burden of everyday practice management.
The main trade-offs for the practice is a loss of autonomy and control over decision-making processes. Also, the acquisition may come with a number of integration challenges including technology, culture identity, staffing, workflows and practice management systems.
Maintaining Independence by Embracing an Aggressive Growth Strategy
Remaining independent allows the practice to maintain complete control over their operations and patient care, while having the internal flexibility and agility to adapt quickly to market changes, patient needs and evolving healthcare trends.
However, the practice must implement an aggressive growth strategy to achieve success in the evolving marketplace. That could include a financial investment by the practice in additional locations and hours, hiring new physicians, developing a digital ecosystem to improve access, scheduling and patient engagement, advertising and or improved measurement of patient expectations and experiences. It also requires outside expertise to evaluate the market, develop the plan and measure the effectiveness and return on investment of the growth initiatives.
Discussion
The decision to pursue being acquired or remain independent is a complex one. Acquisitions offer financial stability, operational support and access to resources but may sacrifice autonomy and face integration challenges. On the other hand by staying independent, a practice can maintain autonomy, flexibility and control if they are willing to invest in expanding marketing initiatives and overcome the associated challenges such as cost, measuring the effectiveness and competing in saturated markets
Ultimately, medical practices should carefully evaluate their unique circumstances, goals and long-term vision when considering these options. Seeking expert advice, conducting a thorough market assessment and considering the practices value, culture and brand equity will help make an informed decision that aligns with the best interests of the practice and its patients.
At Princeton Partners Healthcare & Wellness, our trusted advisors have one goal, to help medical practices identify and evaluate options to accelerate growth and thrive. Our approach begins with a strategic assessment to identify profitable revenue opportunities and technology solutions needed to smartly and efficiently achieve market share growth and financial success by improving patient engagement, communications, and the patient experience, and by elevating the value of the brand.
Whether you are ready for a full-time partner to help you on your road to success or just need some advice, we are here to help.
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