'Beyond medical considerations': Factors that make, or break, spine practice mergers


Spine practices that want to grow often go about it by either merging with other groups or expanding their locations. But there are many elements that can set up success or failure.

Ask Spine Surgeons is a weekly series of questions posed to spine surgeons around the country about clinical, business and policy issues affecting spine care. Becker's invites all spine surgeon and specialist responses.

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Please send responses to Carly Behm at cbehm@beckershealthcare.com by 5 p.m. CST Wednesday, Feb. 7.

Editor's note: Responses were lightly edited for clarity and length.

Question: What makes or breaks successful spine practice mergers and expansions?

Brian Gantwerker, MD. The Craniospinal Center of Los Angeles: Spine practices expand and sometimes contract due to a combination of market pressures, physician decisions, or mismanagement. That being said, it is very possible to thrive yet still fail. There are three keys to any success of a practice — contracts, coding and collections. Without those three, success is elusive. I think this is why so many hospital-acquired practices face such rough seas — the one-size-fits-all of vertically integrated systems is very poor for the health of smaller, more established practices. Their method of "it all comes out in the wash" and not pursuing payment from bad actor payers is a sure ticket to failure, which will of course be conveniently blamed on the "culture" of the acquired practice rather than looking in the mirror and realizing things were going fairly well prior to the acquisition.  

Philip Schneider, MD. The Centers for Advanced Orthopaedics (Bethesda, Md.): What makes or breaks successful spine mergers stretches beyond medical considerations. The success of a merger or expansion is dependent on the parties aligning on long-term, fair business goals and strategies.

A critical aspect of aligning on long-term goals is discovering whether the groups want to remain independent, like The Centers for Advanced Orthopaedics, or eventually sell to private equity. All parties involved must share that vision to avoid potential conflicts arising from differing intentions.

Another fundamental principle of a successful merger is ensuring fairness. Multiple groups merging may introduce elements of rivalry, tension, and control issues. To counteract this, the groups must formulate strong operating agreements, outline fair voting rights, ensure unbiased access to referrals, and clearly define how ancillary income, such as physical therapy and physician extender income, will be distributed. It is critical to put these details in writing, a process that will be intricate and time intensive. Overlooking this step can lead to the failure of the expansion or merger. For seasoned physicians, it is equally crucial to establish a well-documented plan for retirement payouts, including benefits, to ensure a smooth transition and fairness for all involved parties.

Christian Zimmerman, MD. St. Alphonsus Medical Group and SAHS Neuroscience Institute (Boise, Idaho): The givens for any successful business breakthrough and succession are focusing on the content of that business and the audience one serves. The aspects of marketing, design, and branding will tie heavily into today's technology and forward reach to the customer base and beyond. A pillared hybrid of 'people, structure, product, process and policy' applies in all facets of business arrangements and expected success. In my modest opinion, the most important of these pillars should be the choosing of proper and precise personnel and the eventual reliance on those individuals to promote an environment of prosperity and self-respect.

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