Tips for managing hospital-acquired medical practices

A hospital acquiring medical practices is not news. But hospitals having enough managers with good interpersonal communication skills who can integrate and manage medical practices in a hospital-controlled environment is news.

For example, let’s say you work as an accountant/manager in the financial services department of a hospital. The hospital has acquired three solo primary care physician practices and a two-person cardiology practice. However, it has not yet set up an infrastructure to absorb these practices into its new for profit-corporation.

Below are some examples of financial and management challenges that might surface. They will depend upon a number of factors determined by the details of the purchase (compensation – fixed salary, wRVU, fixed base plus productivity bonus; who keeps the A/R; reasons for termination; non-compete clause, etc.)

Short-term financial challenges may include:

1. Explaining to physicians that:
   • they cannot pay for their cars, meals, parking, gasoline and other expenses through the practice;
   • they will get a salary check or direct deposit on the same day as other employees and cannot take a draw when they need money;
   • they will receive a W-2 and not a K-1;
   • they cannot take colleagues or others to dinner and have the practice pay for it unless they submit the request and justify it beforehand; and
   • they might have to pay for it out of their own pockets if they want to hold a year-end party or dinner for just their staff. 
2. If the practice’s A/R for service went to the practice owner before the acquisition, the EOBs must be reviewed to identify whether services and payments both prior to and following the acquisition appear on one EOB. They then must be separated and deposited into their correct account.
3. Expenses incurred before the acquisition are not paid by the new for–profit corporation or the hospital.

Some of your short-term management challenges may include:

1. Explaining to physicians that:
   • they must update their CAQH and get credentialed to the new for-profit practice TIN months before the acquisition;
   • they must be a participating provider (PAR) with any payer the hospital directs;
   • they must be trained on and use the EHR selected by the hospital;
   • they must follow the hospital’s hiring protocols, which may include posting openings for positions at the hospital and background checking potential candidates;
   • they may have to submit purchase orders for new equipment, which then may be sent out to competitive bidding;
   • they must use the hospital’s supply vendors;
   • they must adhere to the hospital’s schedule of holidays for office closures;
   • they will receive a number for their PTO and if they exceed it their compensation may be reduced;
   • they may be assigned to other hospital sites and their schedule will be made up by someone other than them;
   • they may transition into a new call group as directed; and
   • they will (especially the primary care physicians) refer to the specialists the hospital recommends.
2. Malpractice policies must be transferred to the new TIN and you must determine what has to be done if the for-profit corporation uses a different malpractice carrier and the previous policy was a “claims made” policy with a “tail.”
3. You have to train the office manager, who is no longer an employee of the physician’s previous practice, to produce the reports you request.
4. Though you are an employee of the hospital, you have to win over the staff and physicians you are now working with in order to re-engineer the practice. The physicians and staff will initially perceive you as “the enemy.”
5. One of the biggest challenges is that the physicians, even though they have sold their practice to the hospital, may still feel it is their practice. They may have built a successful practice over many years and see it as their “baby.” They may have an emotional attachment to the practice and feel they know what is best for the practice and you don’t.  They may present roadblocks to many of your initiatives.

To reduce or eliminate many of these challenges, I recommend having meetings with the support staff – both clinical and administrative – before the acquisition. Slowly go over the reasons why the physicians decided to sell their practice. List the benefits the staff will now receive as employees of the hospital or the new for–profit. Describe a few of the changes to the practice’s operations that you would like to make over time. If possible, give them your cell phone number and explain that there will be changes but the changes have solid reasons for being implemented.

Schedule a meeting with the physicians and either your direct supervisor or the president of the hospital. Go over many of the same details you shared with staff. You should construct a written agenda for the meeting beforehand so that everyone focuses on what you want to accomplish.

Try to schedule meetings with the staff twice a month during the first six months of the acquisition and once a month with the physicians. The meetings may seem like a gripe session but have someone present who can address their concerns.

These strategies take time to work well and advance planning is imperative. However, it does happen if you are willing to put in the time and effort.

Steven Peltz is founder of Peltz Practice Management & Consulting Services, LLC, and a member of the National Society of Certified Healthcare Business Consultants.