Radiology practices continue to grow, but for several years, mergers and acquisitions between practices have been a topic of discussion in radiology. Although there has not been a significant increase in blended practices, it’s a possibility that still concerns many. If your practice is facing the decision of a merger or acquisition, here’s when it might be beneficial to conjoin.
Listed below are four reasons to consider a merger or acquisition that may be beneficial for your radiology practice.
The size of your practice determines how profitable you are. A merger or acquisition could provide the additional benefit of economies of scale, which is the cost advantage that arises by an increase in the level of production and a decrease in cost production. Economies of scale allow you to increase your abilities of offering subspecialty services and enhance your business opportunities. Your radiology practice can also strengthen its revenue cycle management and marketing initiatives.
Being part of a merger or acquisition will allow your practice to help more patients. Your practice covering a bigger geographic area could potentially be financially beneficial, as the industry moves from fee-for-service to a focus on population health.
As an individual radiology practice, your ability to negotiate fees is limited. As a part of a larger team, you are able to have more power over negotiations with different medical groups and hospitals.
If your radiology practice becomes part of a larger group of entrepreneurs, a larger corporate organization, or a national enterprise, you will have a greater chance of protecting your existing hospital contracts or replacing other radiology groups.
Before taking part in a merger or acquisition, there are numerous factors to consider. Addressing theses factors can help you decide if a merger or acquisition is right for your radiology practice, and help you how to approach and handle it head on.
Lay out what your new organization will look like and how it will run. Determine what type of leadership you want to have, and how it will impact your future relationships with your current referring physicians and hospital partners. Also, determine how your structuring will affect your abilities to make future business decisions. The best way to design your structure is to have all voices in your group be heard without it preventing future decisions that could benefit your radiology practice.
Each radiology practice has different expectations about productivity, employees, referring physicians, and so on. Before your merger or acquisition can be successful, you must discuss with all potential buyers or partners on how these situations can be handled going forward, and agree on a set plan.
In a merger or acquisition, it’s possible that your employment status could change. It could be drastic going from being self-employed to working for another medical group or hospital. Discuss it with your group members, as it may impact members differently and some may be resistant to switching to employee status. Discussing the individual financial implications for each member could aid in strengthening your decisions moving forward.
In a merger or acquisition, massive amounts of data get pulled together. You need to ensure that your practice has the right tools to handle the image volume, as well as have the ability to make them accessible to all of your providers. Implementing an enterprise level Picture Archiving and Communication System (PACS) is essential in this case. A more robust and versatile PACS will allow for a smooth data migration, physician accessibility, and compressed storage.
If your radiology practice is considering a merger or acquisition, you need to start preparing. Before going public with any merger or acquisition, you need to fix any current problems you have. If any financial or professional issues exist, it could scare away any potential buyers or partners. Give yourself several years to prepare and conduct a self-audit. Make any necessary changes and have a plan in place to address your problems, as future partners will look at your practice’s performance in the past couple years. Taking care of any issues you may have now will only increase the value of your practice and make it more appealing to potential buyers or partners.
If you do consider a merger or acquisition, ensure that you set your radiology practice apart from the rest. Extend your geographic reach, control your cost of services, and offer quality services while still maintaining strong ties to your health system.
Make your merger or acquisition run smoothly with HIS. At HIS, we have over three decades of experience in healthcare revenue management, billing, coding, management, and consulting experience. Our radiology consulting services will help make your acquisition or merger more efficient, compliant, and boost the overall profitability of your radiology practice. The only way to truly experience the HIS difference is to begin a partnership with us. Contact us today for more information on our services.