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How to Retain Physicians Through Medical Practice Mergers and Acquisitions

Jackson Physician Search
May 31, 2022

News of the acquisition didn’t come as a surprise to Dr. K. He had suspected the practice was in trouble, and yet, it didn’t make the new reality any easier to accept. So much for his fast track to becoming a partner, he thought. All the reasons he had for choosing an independent practice–autonomy, a voice in decision-making, limitless earning potential–he feared was at risk of disappearing. Would he be just another cog in the wheel at the new healthcare organization? Everything was about to change, and he wasn’t sure he wanted to stick around to see how it would all work out.  

Dr. K’s fears are valid. His professional life is changing, and the uncertainties surrounding that change have incited thoughts of leaving. How can his managers and other healthcare leaders calm his fears? With physician turnover already on the rise, it’s essential that healthcare organizations retain physicians if they hope to preserve continuity of care and ensure a successful merger or acquisition. So, what can leadership do to ease these transitions and avoid physician turnover during times of major changes?   

Practice Consolidation and Physician Employment Increasing

The AMA’s 2020 Physician Practice Benchmark Survey found less than half (49.1%) of patient care physicians are working in a private practice, a drop of almost 5 percentage points from 2018. This was the first time the number of private practice physicians dropped below 50%. For those that remain in private practice, the size of the practice is increasing. According to the survey, 17.2% of physicians were in practices with at least 50 physicians in 2020, up from 14.7% in 2018.

Driving these changes is the fact that private practices are increasingly being acquired by health systems or merging with other practices in order to grow or remain profitable. In a July 2021 MGMA Stat poll, 15% of respondents said their practice had completed an M&A (merger, sale, etc) in the past year. This figure was up from 12% just a year prior.

Private practice consolidation was on the rise well before COVID, but the pandemic certainly accelerated the trend. While growth was the main goal for some, the financial strain caused by shutting down followed by patient hesitancy to return for in-person care proved to be too much for other groups, leaving physicians grappling with major changes. 

Fears About Practice Mergers and Expansion

The fact that physicians are increasingly employed by bigger organizations often goes against what we know about the importance of autonomy and independence to many physicians. In the recent Rural Physician Recruitment and Staffing Survey from Jackson Physician Search, 40% of physicians ranked autonomy as the most important attribute of an employer’s culture. So, it’s understandable that many physicians are initially uncomfortable with mergers and acquisitions that may strip away their independence.

In addition to fears about losing autonomy, physicians may also have concerns about culture clash, learning a new EMR system, changes to patient volume, and differing compensation models that could reduce their income. Whether a practice is being acquired, merging with another practice, or bringing in new physicians, change-related stress is inevitable. Clear communication with physicians is essential to help them navigate the stress and begin to see the changes as opportunities.  

How to Talk to Physicians About Change

Each physician deserves to hear the news of a major change in a one-on-one conversation with their manager or another leader in the organization. Ideally, the conversation takes place in a non-threatening environment. Go for coffee or dinner with each physician and discuss what the future will look like, the reasons for making the change, and what improvements the change will bring to their day-to-day experience of being a doctor. 

This conversation should mark the beginning of an ongoing dialogue in which the physician feels encouraged to share their thoughts, concerns, and ideas regarding the implementation of planned changes. If appropriate, ask them to lead or co-lead some aspect of the transition. If the physician’s fears are related to compensation, you may need to dive deeper into the numbers to prove there will indeed continue to be enough patients (and revenue) for every physician at the practice. These conversations require transparency.

Clear Communication is Critical

What does this look like in practice? A 2018 case study from MGMA details the process of two independent practices merging with an established health system. The paper touches on the pros and cons of the merger and takes us through the various stages of integrating the two practices into the health system. While this specific merger was not without its challenges, the author of the study concluded that clear communication was critical throughout every step of the process. 

From the beginning, individual meetings were held to discuss the changes and invite input from incoming physicians on what future processes should look like post-merger. The author stressed that the earlier this type of communication begins, the better. 

The idea of change (rather than specific changes) is the primary driver of physician stress during a merger, so it is critical that leadership is transparent about the changes and proactive about addressing fears that arise as a result. Major transitions are unlikely to be seamless, but if leadership is transparent and willing to incorporate input from physician stakeholders, the organization is more likely to make it to the other side without significant physician turnover.  

If your organization is undergoing major change, it might be time to reevaluate your staffing requirements. Whether you need to bring in a new physician or provide your current team more support with an advanced practice provider, the team at Jackson Physician Search has the expertise to advise and assist. Contact a physician recruiter today to find out how we can help.

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