With the increasing trend of hospitals acquiring medical practices and employing physicians, many hospital leaders know what to do to actually acquire a practice, but things get a little less clear after the acquisition is complete. For example, some systems may consider relocating practices to have them closer to the hospital. Additionally, executives also need to know what to do when a physician leaves the organization to work elsewhere or retire.
Marc Halley, MBA, president and CEO of The Halley Consulting Group, says there is one thing that all hospital and health system executives need to keep in mind in all of these situations. "Hospitals need to think about the smallest transaction […] between the individual patient and the physician […] when making decisions about moving practices and physicians," he says. "When you don't think about that transaction, that is when you get into trouble."
In other words, hospitals need to always put the patient's relationship with the physician first when making decisions about moving a practice or changing physicians, be it for a primary care physician practice or a practice made up of subspecialists.
He says this because primary care offices become part of the neighborhood in urban and suburban markets. Most patients live within a 10 minute drive from their primary care physician's office. If the new owners pick up and move a practice, it disrupts the neighborhood strategy of primary care and frustrates the patients.
While Mr. Halley cautions against moving primary care practices away from their original neighborhood, he says that subspecialty practices are slightly easier to move and still keep the patients. "Patients may only see subspecialists for a few weeks," he says, unless the subspecialist treats chronic conditions. If that is the case, the subspecialist should be treated more like a primary care physician and not be moved too far.
Mr. Halley says that hospitals "can and should" have employed physicians sign a non-compete clause. "It's not unusual to have a non-compete clause that requires primary care physicians to move at least five miles away with a restriction of a year or two," Mr. Halley says. "If a primary care physician moves only a few blocks away, guess where his patients will go. They will follow their doctor."
When a new physician is coming in as a replacement for a retiring physician, there is a risk of losing patients. But Mr. Halley says that a higher percentage of patients will stay at the practice if they know the replacement physician. "There will be some turnover, but you can keep three-quarters of a practice if you pay attention to those details," Mr. Halley says.
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Marc Halley, MBA, president and CEO of The Halley Consulting Group, says there is one thing that all hospital and health system executives need to keep in mind in all of these situations. "Hospitals need to think about the smallest transaction […] between the individual patient and the physician […] when making decisions about moving practices and physicians," he says. "When you don't think about that transaction, that is when you get into trouble."
In other words, hospitals need to always put the patient's relationship with the physician first when making decisions about moving a practice or changing physicians, be it for a primary care physician practice or a practice made up of subspecialists.
The 10 minute rule
Mr. Halley says that once a hospital or health system acquires a primary care physician practice, it should not move the practice far. "Don't pick it up and move it to your practice in the name of economies of scale," he says. "If you feel the need to consolidate or move a practice, do not move it beyond 10 minutes [from its original location]."He says this because primary care offices become part of the neighborhood in urban and suburban markets. Most patients live within a 10 minute drive from their primary care physician's office. If the new owners pick up and move a practice, it disrupts the neighborhood strategy of primary care and frustrates the patients.
While Mr. Halley cautions against moving primary care practices away from their original neighborhood, he says that subspecialty practices are slightly easier to move and still keep the patients. "Patients may only see subspecialists for a few weeks," he says, unless the subspecialist treats chronic conditions. If that is the case, the subspecialist should be treated more like a primary care physician and not be moved too far.
Other side of the coin
While hospitals are acquiring practices, it is important to remember that the physicians they employ have to come from somewhere, such as another health system or hospital. As such, executives need to keep in mind that their physicians may leave for employment elsewhere one day.Mr. Halley says that hospitals "can and should" have employed physicians sign a non-compete clause. "It's not unusual to have a non-compete clause that requires primary care physicians to move at least five miles away with a restriction of a year or two," Mr. Halley says. "If a primary care physician moves only a few blocks away, guess where his patients will go. They will follow their doctor."
Changing physicians
It is also important for hospital executives to remember the patient-physician interaction when a physician retires or they add a new physician to an established practice. "If you do need to make a change in physician [there should be] a minimum of 90 days of that physician in the office getting to know patients until the hand off," Mr. Halley says.When a new physician is coming in as a replacement for a retiring physician, there is a risk of losing patients. But Mr. Halley says that a higher percentage of patients will stay at the practice if they know the replacement physician. "There will be some turnover, but you can keep three-quarters of a practice if you pay attention to those details," Mr. Halley says.
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