Radiology mergers and acquisitions have become a major trend in healthcare. Since healthcare reform requires greater accountability as it moves toward a standard of coordinated care, radiologists are weighing the need to either merge, acquire or be acquired. The only other option is to remain independent.
Know All Your Reason for Merging
In an article published by Diagnostic Imaging, Doug Smith, managing partner of Barrington Lakes, a healthcare consulting firm, states, “My advice at the front end is for practices or groups to comprehensively understand why they’re considering a merger or acquisition. At the end of the day, they need to be able to identify how life will be different as a result of a merger. They better clearly understand that or they’ll float around, trying to figure it out.”
When advising clients who are debating whether a merger or acquisition would be best for them, Smith provides some directives:
- Pinpoint the objective for pursuing a merger.
- Discuss leadership, governance, management and financial cultures to ensure there’s a match.
- Elect a three or four-person merger investigation committee to represent the partnership and to relay information.
- Create task forces for each major element of the merger, such as committees for bylaws, government, and compensation.
Culture is Key
Identifying how life will be different after the merger points to one of the most critical aspects of that future life – culture. There are far too many well-known examples of a merger ending up like a trip down Niagara Falls due to culture clashes.
“In many cases, culture is not given the emphasis it merits prior to the merger. It’s much tougher to manage after the merger,” admits Lynn Elliott, CEO of Radiology Associates of North Texas in Dallas, in an article published by Health Imaging.
In the same article, Charlotte Radiology, an 85-radiology practice in North Carolina, credits its upfront investment in cultural integration as a key to a successful merger with a large physician group. “The amount of time we spent trying to define the post-merger mission objectives and leadership helped make the process as seamless as possible,” explains COO Mark Jensen. The groups assessed best practices in both organizations to determine which practices might best fit the merged organization.
Keeping Your Independence
For organizations that would prefer to remain independent, there are necessary factors to consider in order to remain viable and competitive in the new healthcare environment.
Curtis Kauffman-Pickelle, publisher of Radiology Business Journal, points out that the independent radiology business model is changing rapidly. “Our mom-and-pop cottage industry has been transformed into one in which a very high degree of professionalism, a keen process, solid infrastructure and resources, and visionary leadership are the keys to success.”
“Independence can work, but it will not be as the same old practice that coasted along on the coattails of an ever-growing aggregate marketplace. If you choose this option, you will nevertheless need to build your practice into one that resembles a much larger, supersized group in every way,” she said.
What are your thoughts on whether radiologists should stay independent or merge? I encourage you to share your thoughts via a comment below.