Physicians Shut Out of ACOs Seek to Merge Practices

Greg Freeman , June 12, 2013

There are both advantages and disadvantages to entering a hospital system, the same as there are with joining a physician group. With the latter, the prime benefit is that you can be an owner, Fanburg says. With a hospital alliance, that is difficult or impossible. When hospitals are nonprofit, physician ownership is not possible.

"Even for-profit hospitals are not looking for physician ownership," Fanburg says. "So you're somewhat abdicating some decision-making and authority going forward. If you are emotionally and mentally prepared to relinquish that to a hospital administrator, then perhaps it is not so bad."

The other advantage to joining a multispecialty group is that, as long as you adhere to the Stark antikickback laws, you can share in the revenue of those other physicians.

"You're not going to share in that revenue in a hospital setting," Fanburg says. "Additionally, in a hospital setting you have IRS rules that require an ongoing analysis of fair market value. That means the potential increases are limited by that analysis."

As a general rule, Fanburg tends to steer physicians toward joining a multispecialty group rather than signing on with a hospital, primarily because the physician will have more control and more opportunity to direct the future of the multispecialty group. But he also notes that those are not top priorities for some physicians, who are more comfortable handing over the reins to someone else. It can be less work and less stress, as long as you choose carefully when handing over control, he says.

Another of Fanburg's clients is a cardiologist who was trying to decide his next move. He was concerned because the hospitals in his area were acquiring the primaries, which were his referral base.

"He felt it was more important to follow his referral base to the hospital than to join a multispecialty group," Fanburg explains. "He weighed the benefits of joining in the revenue from the ancillary specialists, but he realized that he would have no one to send him referrals. So there can be appropriate reasons to go the hospital route, depending on the circumstances of the doctor."

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