The constantly evolving healthcare industry has caused many physicians to rethink their practice options. The most common options available today are to stay as is, become an employee of a hospital or healthcare network, or sell the practice to a hospital or healthcare network. There is another option which maybe the best choice for many medical practices: the “megagroup”.
A “megagroup” comprises several independent medical practices (referred to as divisions) that join together and become one larger practice. It can be a single specialty or multispecialty practice, usually staffing at least 30 to 40 physicians. As with most big decisions, there are pros and cons to consider.
A major advantage to joining a “megagroup,” rather than aligning with a hospital or healthcare network, is that you retain a high degree of autonomy while still maintaining, and very often improving, quality of care. It also can improve a physician’s bottom line, as many administrative positions (e.g billing, managed care contracting, human resources, purchasing, information technology, accounting) are centralized in a central business office (CBO). Other advantages include an increased likelihood of recruiting and retaining top physicians, greater access to information technology (IT), improved ability to deal with regulatory pressures, and greater access to bank financing.
There are a number of risks to consider as well. There is typically a large initial capital investment, and joining practices links the physician to the group debt of the “megagroup”. There is also a very considerable time commitment on the part of the founding partners in getting the operation going and keeping it afloat. Finally, if it is unsuccessful, the costs associated with member withdrawal (or even worse, an “unwinding” of the entire “megagroup”) are significant.
Is joining a “megagroup” the right decision for your practice? Call Urbach & Avraham today and let our experienced team of CPAs guide your medical practice in the direction that best suits your needs and aspirations.