10 Things to Know Before Being Acquired

Acquisitions will go more smoothly if medical practices plan ahead for the logistical and emotional challenges.

"Don't get so caught up in the 'wedding' plans you forget that the next morning, you all will wake up in bed together," said Linda Zinkovich, Chief Operating Officer for Primary Care and Medical Specialty Practices at Orlando Health in Orlando, Fla.

At this year's Medical Group Management Association (MGMA) Annual Conference in San Francisco, Calif., Zinkovich offered 10 tips for avoiding problems during acquisitions. She based much of her insight on her own experience from the acquisition of her former employer, the 85-physician group, Physician Associates by Orlando Health four years ago.

Here are the 10 tips:

1. Remember this is a "marriage."

Medical practices should negotiate details such as how billing, recruitment and compensation will be handled before they sign on the dotted line.

2.Not everyone on either side is going to like this.

Often the objections will come from an unexpected direction, Zinkovich explained. Perhaps a vendor will be angry because of getting cut out of the new purchasing agreements. Sometimes patients will complain.

At Orlando Health, the opposition to the acquisition of Physician Associates came from hospital nurses who thought money for the acquisition had prevented them from getting raises.  "For these nurses, we were the worst thing that ever happened to their health system," she said.

3. Money isn't everything.

If the mission and values of the two organizations are not aligned, everyone can anticipate a long period of conflict, Zinkovich said.

4. Be careful what you ask for. You might get it.

It's important to think through the long-term consequences of arrangements that look good in the short term, Zinkovich said. For example, physicians at one practice acquired by Orlando Health negotiated higher salaries for two years, but may have difficulty adjusting when that period ends and they have to take big pay cuts.

5. Due diligence on both sides means more than just looking at finances.

Practices being acquired should make sure there are no lawsuits and no CMS actions pending against the entity acquiring them. Also find out that they are comfortable with everyone in that entity's top management.

6. Really evaluate what you want long term and focus on getting those during negotiations.

While some physicians may want higher salaries, others may want more autonomy. For the physicians in Zinkovich's practice, the most important point was to maintain control.

7. Start "living together" as soon as possible.

Before the acquisition becomes official, start work on reconciling practice management systems, EHRs and other systems, Zinkovich advised.

8. Remember that compromise takes both sides giving something up.

Think carefully about what which battles you pick and remember sometimes the other side is right and you're wrong, Zinkovich recommended.

9. It is very difficult for those who have been owners and in charge to suddenly become employees.

Physicians in particular can be stubborn about changing the way they practice, said Zinkovich. She urged administrators to talk it through with everyone involved in advance.

10. Charts (patients) are not necessarily an asset that has monetary value.

In assessing the value of a practice, patients are not seen as assets because they are not necessarily loyal.  "What is of value is the profit you make," Zinkovich said.