DaVita Medical Insights

How to Explore Physician Practice Options in the Shifting Health Care Landscape

Considering a new practice business model to stay competitive in today’s shifting landscape is a highly individualized decision that can have a big impact on your future. As you begin to examine different types of strategic partnerships—such as staying independent, partnering with a hospital, partnering with a large kidney care provider or merging with another independent nephrology group—some options will rise to the top. It’s important to continue to be thorough, in the following ways, during the due diligence process to ensure you select the best option for you and your practice.

1. Examine your partner

Regardless of the business model you are considering, it’s important to have a good understanding of your potential partner. Taking the following steps may help yield invaluable information as you further evaluate your options.

  • Identify their leader. This is especially important when you are considering merging with another independent nephrology group, where individual personalities and experience can disproportionately impact how the organization functions.
  • Identify their interests. Why is the potential partner looking to grow? For example, in the case of a hospital, is the organization looking to merge to fill out their roster of physicians or does it have a specific strategy for nephrology? Is their focus on chronic kidney disease or more exclusively on transplants? The answers to these types of questions can help determine whether the partner’s interests align with your priorities.
  • Understand their culture. Diving deeper into a potential partner’s strategy, mission and values can help determine whether the synergy necessary for a successful partnership exists.
  • Understand the governing structure. How are decisions made? Will you, for example, have a say in quality reporting?

2. Understand Compensation

Divesting your practice will likely bring along a change in compensation. Payment arrangements fall along a wide continuum—from being entirely based on productivity to 100 percent salary. In this era of integrated care and risk-based arrangements, it’s also important to understand whether you are able to participate in the upside of meeting specified clinical and financial goals.

Of course, the purchase of your practice is also no small consideration. Keep in mind that some organizations require a fair market valuation opinion. This can slow the divestiture process due to the accompanying regulatory requirements. Regardless, consider how the purchase price will be structured. Are there incentives for staying on? Any restrictions? Deals vary greatly so it’s important to understand these details.

Also, be wary of an offer that appears out of line with the partner’s acquisition costs. An inflated price likely comes with a lot of strings attached. Look for a valuation process that is compliant, consistent and transparent.

 3. The new frontier of large kidney care providers

Historically, nephrologists had just a few options when considering business opportunities: working for a hospital, working for themselves or merging with another nephrology group. Only recently have larger dialysis providers started employing nephrologists, and this lesser-known option warrants further examination. Here are some issues to consider:

  • Motivation. Is the provider actively trying to grow nephrology and chronic kidney disease opportunities? How does this fit with their larger strategy and yours?
  • Experience. Does the provider have experience managing practices separate and independent from dialysis facilities? How about the management team? Do they have experience locally, regionally or nationally?
  • Infrastructure. From MIPS to MACRA, nephrologists have a lot on their plate. What technology platform does the provider use, and what infrastructure is available to support payment and reporting requirements?

4. Evolve to survive

Like many industries, health care is evolving rapidly and must keep pace with new demands. The alternative—maintaining the status quo amid rapid market changes—can decimate any business. The good news is there are several viable options for nephrologists and their practices. As you consider positioning yourself for the future, it never hurts to examine your options. Indeed, it is what all healthy businesses should do. Asking the right questions will help set you on a path to future success.

Some of this content has been republished, with permission, from Renal & Urology News.

Robert Provenzano, MD, FACP, FASN

Robert Provenzano, MD, FACP, FASN

In addition to his roles as chief medical officer at Nephrology Practice Solutions and vice president of medical affairs at DaVita Kidney Care, Robert Provenzano, MD, is a clinical professor of medicine at Wayne State University School of Medicine in Detroit, where he earned his medical degree. He completed his fellowship training at Henry Ford Hospital and served as the chief of the nephrology, hypertension & transplantation section and director of nephrology research at St. John Hospital and Medical Center in Detroit. Dr. Provenzano is former president of the Renal Physicians Association and chair of the National Kidney Foundation of Michigan. He is also former CEO of St. Clair Specialty Physicians, PC, a multistate nephrology practice. He has published extensively on kidney care business models and is the chief medical officer of Nephrology Practice Solutions (NPS), a national kidney care management company affiliated with DaVita that oversees owned and managed practices. Twitter: @DrBobPro

Mark Hovermann, MBA

Mark Hovermann, MBA

Mark Hovermann, MBA, is a senior director of corporate development at DaVita Kidney Care.

Lanny Teets

Lanny Teets

Lanny Teets is the director of transactions and growth initiatives at Nephrology Practice Solutions.