On the outside a merger of two medical practices or the acquisition of one practice by another can appear like a logical and straightforward process. However, there are actually a number of hidden “gotchas” that need to be considered.
First and foremost the blending of new personalities and management styles is always a more significant process than on might imagine. Also the process of medical practice merger “decision making” is altered and can actually become a potential source of contention and unrest.
Obviously, there is a lot of preparation and evaluation that must happen before an actual medical practice merger or acquisition takes place. There must be an objective and consistent valuation of the entities, particularly if there is to be a medical practice merger. If you have the same entity perform the valuations, then this will allow you to compare apples to apples.
Now there is a long to-do list of items that have to be reviewed and resolved prior to a medical practice merger. Long-standing relationships might be placed in jeopardy and you have to account for that. You have to think about which attorney will the new entity use? Which accountant? Which insurance broker? Whose pension administrator? The list can go on and on.
With a merger there will likely be quite a few overlaps in staffing positions like practice administrators, bookkeepers, and employees within the insurance and billing departments. You will have to determine which employees will stay and who you will have to let go. This is also assuming that one of the reasons for the medical practice merger was to realize some economies of scale in staffing and personnel.
You will also have to think about the legal and tax consequences. Usually, the merging medical practice parties will each go to their accountants and attorneys that have expertise in the legal, financial and tax implications but do not have knowledge as to the large number of operational issues that will be involved. In our opinion, Practice Advisors 360 can bring the full scope of medical practice merger knowledge, and shine light on what needs to be done. We can coordinate with the attorneys, accountants, etc., to make sure that they do their part.
Practice Advisors stands ready to help keep you from heading down the slippery slope of medical practice merger. And to keep you from a disastrous conclusion or an expensive courtship with no marriage.