Merging Gastroenterology Groups to Stay Independent: Q&A With Rocky Mountain Gastroenterology Associates CEO Craig BakkenEarlier this year, Rocky Mountain Gastroenterology Associates and Arapahoe Gastroenterology announced they would merge in an agreement effective October 1. The Denver-based gastroenterology groups include 30 board-certified gastroenterologists, and 10 mid-level practitioners all together.
"The practices are in the Denver metropolitan area and there are the usual range of insurance companies and hospital systems in the market," says Craig Bakken, CEO of Rocky Mountain Gastroenterology Associates and Rocky Mountain Endoscopy Centers. "The physicians in both practices felt that they wanted to remain independent going forward as opposed to being part of a different ownership model, so we decided to merge."
Mr. Bakken discusses the benefits and opportunities available as a result of the merger and where the practice is headed in the future.
Q: Why did these two groups decide to merge?
Craig Bakken: Between the two practices, we cover most or all of the Denver metropolitan community. From the standpoint of being accessible, that was a plus and now we have the capability to see patients anywhere in the five or six county region.
Our practices were logical partners because we have worked on several projects together; we are joint owners of a clinical research company — Rocky Mountain Clinical Research — that has been in operation for the past several years and members of both practices are board members. We also have a joint venture pathology lab for GI services. It's one of the only joint venture GI pathology labs in the country. There has been a great deal of contact and dialogue between the two practices for a long period of time because of those projects.
Q: In most regions, specialty groups compete against each other for patients and presence in the community. How were you able to develop such a stable and friendly relationship between the two GI groups?
CB: We don't have overlapping service areas between the two groups, so we weren't part of each other's competitive landscape. I think having had the experience working together was the biggest factor in the success of this merger.
All of the physicians share the same philosophy and wanted to remain independent — not becoming part of another ownership model. That was important because it will be much easier to work with a variety of payors and referring sources as we grow larger. There are hospitals recruiting and hiring primary care physicians actively in our community, and that continues at a lesser pace today. We felt the best thing to do to serve everyone in a large geographic area was for us to partner.
Q: When it's all said and done, what will the merger encompass?
CB: We're consolidating our business office, information systems, purchasing arrangements and working with vendors to create commonality and uniformity. All of this has to happen as a precursor to determining whether we can gain benefits by staying with the vendor we have now or switching to a new vendor.
We expect there will be some savings within this process. We don't see the elimination of any physicians from either group. We do have some vacancies in the business office and we'll be rounding out that team as soon as possible.
We will continue to manage five endoscopy centers. The ability to offer that services as a high quality, low cost outpatient venue and cover the entire geographic area is something that payors will be very attracted to. Not only do we have the largest practice, but also the largest group of GI ASCs and they are geographically dispersed, so it makes for a great network.
Q: Where there any surprises or challenges you encountered during the process?
CB: I've done a number of these types of mergers in various settings and this one had the fewest surprises of them all. There were delays for various reasons and a few stops and starts, but for the most part we kept moving forward. We had a merger committee and held discussions on key issues, including governance. There weren't any surprises because we didn't rush to judgment; it was thoughtful and all the stakeholders were at the table.
The challenge will be after the fact to mesh the practices and create improvements. If you were trying to put people who didn't know each other together, it's more difficult; we had a history of working together and realized that if we were going to make a larger practice, there wasn't much question about who our best partner would be.
Q: It definitely seems like the two groups had an advantage heading into this merger because of their previous partnerships. How can groups with no such history decide whether they would make good partners?
CB: You can find some things to work together on in the "engagement" phase before you get married. Effective dating before marriage can tell you a lot about a person, and the same is true for physician partners. Walk before you run — try each other out.
The other reason why we have been such good partners is because nobody is trying to do this for purely short term financial reasons; everyone agreed this was an opportunity for the long term to meet the goals of remaining independent, improving access to care and doing new things that we couldn't do alone.
The whole issue of adapting to new ways of being paid for services — either bundled payments or risk contracts — makes this partnership ideal for payors to take care of their members because we are accessible in the whole Denver region after the merger. This is a win-win situation for everyone because if we remained two separate practices the process of care would be much more complex and take longer.
Q: Going forward, what is your strategic plan for success as one big group?
CB: There are new markets that neither one of us has fully engaged in the surrounding counties. Those might develop now and we can work with them to coordinate an approach for expansion instead of competing with each other for market share. There are also opportunities for us to develop some of the more advanced procedures and further specialize within gastroenterology.
We have one of the most active endoscopic ultrasound teams in Denver and they have access to additional referrals as a result of the merger. Volume breeds confidence and that's good for everyone.
In terms of today's healthcare environment, I think we are getting ahead of and preparing for new ways of working with health plans and others. There has been a pioneer accountable care organization in Denver, so we expect to see them trying new ways of assuming risk for Medicare members. A lot of this gets to the heart of how specialists work with primary care physicians and payors; they have to adapt to changes there and take risk where appropriate. Those are new forces and being a larger group allows us flexibility to work with those issues.
We should be better prepared for alternative payments by the nature of our size and the resources we command.
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