Practice management companies look to ACOs for growth

The publicly traded companies intend to keep expanding into various parts of hospital-based medicine.

By — Posted Jan. 23, 2012

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Physician practice management companies are forging ahead with expansion plans into new areas of hospital-based medicine as they position themselves to participate in accountable care organizations and other aspects of health system reform.

"That's part of our growth strategy. We will continue to grow through acquisition," said David Parker, vice president of investor relations and corporate communications with Mednax, based in Sunrise, Fla. "We look for practices with longstanding relationships with hospitals that want to continue serving their community."

The companies are not buying primary care and other outpatient practices right now, although they are expanding into areas of hospital-based medicine that have not traditionally been their focus. This is in part to improve their ability to reduce readmissions and receive bonuses for improving quality and decreasing costs within an accountable care organization.

For example, Mednax, which has long bought up neonatology and anesthesia medical groups, purchased 10 practices in 2011 and 14 in 2010. In 2011, it expanded into pediatric surgery.

Although Mednax bought fewer acquisitions, the totals don't reflect the company actually stepping down its pace. The firm is focused on purchasing more anesthesia groups through its American Anesthesiology division, because company officials estimate that nearly a quarter of neonatologists in the country already are affiliated through its Pediatrix Medical Group. Anesthesia groups tend to be larger than those providing care for hospitalized infants and children, which means any merger or acquisition may take more time.

Other large practice management companies also acquired a significant number of practices in 2011 and said the pace would hold steady in 2012.

"We believe we will continue to grow through the acquisition of practices that appreciate the breadth and depth of resources we can offer to help them address the needs of their hospital clients and patients," said Tracy Young, vice president of communications with TeamHealth, based in Knoxville, Tenn.

TeamHealth purchased four practices in 2011, but only two were emergency medicine, the company's traditional focus. The other acquisitions were a group of anesthesiologists and a hospitalist company. In 2010, three emergency medicine and one anesthesiology practices were bought.

"Our significant investments in information technology, the ability to take advantage of cost efficiencies due to our size, and the implementation of standardized evidence-based practices help to position TeamHealth and our affiliated practices to succeed under health care reform," Young said.

IPC The Hospitalist Company, which is based in North Hollywood, Calif., already participates in several ACOs and purchased 13 practices in 2011 and 15 in 2010. Most were hospitalist groups, but some were focused on wound care or provided services in nursing homes and assisted-living facilities.

The terms of these acquisitions were not disclosed.

After a practice is bought, physicians may be employed by an affiliated professional organization or employed directly. This is determined by relevant national and state laws regarding corporate practice of medicine. Practice management companies take care of running the practice while owning the contracts and receiving payment for services provided by affiliated physicians.

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