VMG Health Webinar Offers Discussion of Trends and Strategies in Physician/Hospital Relationships
On Nov. 19, VMG Health presented a Webinar titled "Trends in Strategies and Valuation of Physician/Hospital Relationships," which provided participants an overview of current trends regarding physician/hospital relationships, including a discussion of how healthcare reform and possible changes in reimbursements could impact the value of physician-owned entities and the relationship of these entities with hospitals and health systems.
Presenters were Elliott Jeter, Health, CFA, CPA, ABV, MBA, partner with VMG Health and Stephan Peron, partner, AVA, also a partner with VMG Health.
Mr. Jeter began by discussing market trends regarding physician-owned businesses (POBs), including surgery centers and other ancillary businesses. These trends include a poor economy and tight capital market, declining reimbursement and uncertainty regarding healthcare reform.
He discussed the exponential growth of POBs over past 10 years, which led to many profitable service lines leaving the hospital setting. Physicians were drawn to owning their own ancillary business because of poor relationships with hospitals and the opportunity for additional income.
However, Mr. Jeter explained that many POBs have reached a point of maturation that makes growth and increased profitability difficult. This maturation, in addition to market trends of uncertain reimbursements and healthcare reform, has created a "perfect storm" for market consolidation, including an increase in hospital/POB joint ventures.
According to Mr. Peron, reimbursement uncertainty is one of the top drivers of physician relationships with hospitals. In the next several years, some POBs, including imaging and cancer centers, face Medicare reimbursement cuts, as do many medical specialties, which could impact profitability.
In response, many physicians are looking to sell ancillary businesses and practices, enter into joint-venture relationships with hospitals and seek hospital employment, according to Mr. Jeter.
Hospitals are generally interested in acquiring POBs and seek out businesses that have high-earning potential, cohesive physicians and low risk.
Several benefits of hospital joint ventures include:
• Greater ability to adhere to quality reporting requirement
• Greater ability to implement IT indicatives
• Shielding POBs from isolated regulation changes
The speakers ended the Webinar by explaining how both the minority and majority interest in these physician/hospital joint ventures are valued and how fair market value for such arrangements is determined.
Download the Webinar presentation here (pdf). You will find a "Certificate of Participation" at the end.
View the Webinar here (wmv). We suggest you download the video to your computer before viewing to ensure better quality. If you have problems viewing the video, which is in Windows Media Video format, you can use a program like VLC media player, free for download here.
Learn more about VMG Health.
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