Merge safely: How to combine practices successfully

Many physician group mergers fail because doctors overlook vital issues. Being careful in how you combine practices, experts say, can give you a better chance at staying together.

By Mike Norbut, AMNews staff. April 5, 2004.

Midwest Medical Associates, which officially started business April 1, is made up of three groups that were seeking safety in numbers. It has plans to grow even larger in the coming years -- provided it doesn't dissolve first.

But the St. Louis-area physicians are confident that their agreement won't suffer the fate that befalls many physician group mergers. Their feelings stem not from financial goals, such as gaining leverage with insurers, serving a larger patient population and gaining a stake in future investment opportunities, but from the 18 months they spent on the nitty-gritty details that, if neglected, can ruin a merger.

"You have to set out what you expect to happen with the new organization," said Patrick Garrett, MD, an internist and new president of Midwest Medical Associates. "If expectations aren't set, it's difficult to proceed."

Often, mergers dissolve almost as quickly as they're formed. Deals fall apart because they're formed on flimsy ideals and without the future partners hashing out the delicate details up front, health care consultants said.

From the ability to make tough staffing decisions to sharing a common medical philosophy, there are many factors that go into making a physician group merger work. Merging is a time-consuming process that requires the foresight to anticipate potential problems that can cause a group to implode down the road.

No strategy is immune to failure, if certain vital topics aren't discussed early on, consultants said. Some groups choose to grow horizontally, adding specialties to make themselves into an all-inclusive group, but that can have pitfalls in the form of unforeseen expenses and unfamiliar governance issues. Other groups seek to grow vertically, adding doctors in the same specialty until it becomes top-heavy and difficult to operate because of competing interests among partners.