In partnerships, the key to success lies in communication, understanding, and involvement. This certainly applies to PPMs, which learned in the 1990s that an “us versus them” mentality between physicians and the management companies can lead to economic turmoil.
To avoid a similar fate, those in charge of managing a PPM must understand the needs and desires of those leading the boots-on-the-ground patient operations. Working closely with physicians and establishing what they need is crucial to aligning incentives, which leads to happier employees and a better return on investment. It is incumbent upon the PPMs of today to learn from the mistakes of 20 years ago and foster healthy, receptive relationships with physicians. It is also important to truly integrate acquired practices, so that the physicians really feel part of a single integrated system and not part of an independent affiliate of the PPM.
All of this can be done using the following five strategies:
Ensure Integration: Immediately, post-closing, ensure that the PPM’s integration team takes real steps to integrate the acquired practice’s business into the PPM. Consolidate systems and processes, so that the practices and PPM are deeply intertwined and not loosely affiliated. Proper integration up front is key to ultimate success.
Enlist Input: As PPM owners understand, physician input is traditionally tied to physician ownership. However, this type of ownership is becoming rarer. In 2017, the proportion of patient care physicians with an ownership stake in their medical practice dropped below 50 percent for the first time. In light of this shifting landscape, it’s important for PPM owners to remember that diminishing physician ownership should not also foster diminishing physician input.
Build Trust: When acquiring a practice, listening to physician concerns is critical, as lack of trust or understanding can often be the greatest hurdle when finalizing a deal. Addressing the needs of the physicians, whether through linking compensation to practice profitability or divvying up equity, shows you’re invested in their well-being. This can, in turn, help reduce physician resentment and drive post-transaction performance.
Keep Open Communication: Once an acquisition takes place, it’s necessary to maintain a regular line of communication with physicians. Some PPMs employ a physician leadership board, where feedback and discussion takes place in a more formalized setting. However, physician input can (and should) also be gathered on an ongoing, informal basis. Regardless of the method, maintaining an open dialogue and responding to physician ideas will improve alignment and strengthen the relationship between management and physicians in the immediate term.
Set Joint Goals: Looking ahead for ongoing, post-deal success, it’s important to set a clear vision for future goals and implement an achievable growth strategy. Goals should be oriented toward improving conditions for physicians, as well as doing what works best for the practice overall. The vision should go beyond what will bring the most equity and return, and also include what will most benefit those who keep operations running every day.