Hospital putting language into group contract to prevent sell out to AMC

[aneftp]

Visiting my sister up north. All MD group. She's full partner. Asked her about talks to sell the practice. She says their contract has language that prevents them from selling to management firm. Which I found odd.

Or are the hospital administrators getting smarter?

She feels it's a setup for hospital to just employ the anesthesiologists. They don't get a subsidy outside of a $300k to have "free MD" available for emergencies/pacu from 7-3pm. Top 5 population area.

Have any of you guys had this happen where there is language in contract to prevent sell of executive anesthesia services?

Or are these hospital administrators ahead of the game and not lazy like those who just shop around to AMC for lowest bid.

Her group had very very prelim talks with 2 of the big 3 management companies but nothing came to fruition.

I assume the AMC likely tried to come her hospital administrstion directly (like what happened to a local Florida hospital) and those administrator force the private peds only group become hospital employees.

So maybe those hospital administrators are weary of AMCs. But doesn't look like the group has many ways out. It's a 52 group all MD practice. They did think about merging with other big MD group but that would have created what amounts to a 90% monopoly in that particular 10-15 mile radius with good payer mix. But both groups weren't going to share financial data with each other.

I just feel once again. Hospitals AMCs etc take advantage of physician dysfunction and no one willing to work together. And this is what becomes of anesthesia. Hospital employee or AMC takeover. In this case it's the hospital taking the initiative to prevent a sell out of anesthesia services

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[Mman]

It's my understanding that the more reputable AMC companies won't buy out a group unless the hospital is on board with it. Or they risk what happened in Asheville, NC that we discussed here 12+ months ago when they got bought out and the hospital subsequently cancelled their contract and took the department in house.

If you are investing millions of dollars into something, you kinda want to be sure that there are no kinks and you do some research. It'd be stupid on the AMC part to not talk to the hospital first.

 

[periopdoc]

It would be helpful to know when the language was added to the contract, but I will assume that it was within the last 10 years.

I seriously doubt this has anything to do with admin being wary of AMCs, and everything to do with them understanding the inevitability of capitation based, and shared savings, "value based" reimbursement models.

Once these models are in place, the hospital won't want to be paying any outside group, be it private or AMC. They will want to bring everything in house where they have complete control over the cost.

 

[deleted171991]

That's very smart from the hospital management. They want to be in control. They have probably seen what happens when AMCs come in, bringing some second-rate or overworked employees with them, and quality suffers. Plus they don't want the anesthesia group to make extra money on their back, by selling the anesthesia contract. In their logic, if the contract is worth money for an AMC, the AMC should spend it on making a better offer than the anesthesia group the next time the contract is up for grabs. They get to play the AMC against the local group, and the other way round, instead of cooperating, thus decreasing the price for the hospital. They could even force the anesthesia group to sell out to the hospital and become hospital employees (or be replaced by the AMC).

If this a for-profit or bigger hospital system, I would look for a backup plan for my job. These guys are planning to cut the costs of anesthesia services big-time, one way or another.

I didn't get the part about the "monopoly" if merging with the other group.

 

[cockblockandrun]

I am seeing some small trends around the country where hospital administration and CEOs are picking up on the AMC racket the AMCs. A few I have spoken to lately are planning on booting them out and making the anesthesia department hospital employees. The AMCs get a massive stipend from the hospital but then run it barebones and get locums only when the situation gets dire. And 90% of locums are disasters and the other 10% do it for the lifestyle and to be able to take advantage of the AMCs. Before anyone criticizes my comment about locums, I am full time locums so I know the industry real well. If you're a mercenary like me, the desperation of the AMCs can be your biggest advantage

 

[Man o War]

If this is indeed a trend, I'm all for it. If I only have 2 choices I'd much rather work for a hospital than one of these AMCs. I understand from some posters here there are still a few decent sites, but by and large from what I've seen they're worse than any other work situation for the individual doctor.

 

[deleted126335]

Visiting my sister up north. All MD group. She's full partner. Asked her about talks to sell the practice. She says their contract has language that prevents them from selling to management firm. Which I found odd.

Or are the hospital administrators getting smarter?

She feels it's a setup for hospital to just employ the anesthesiologists. They don't get a subsidy outside of a $300k to have "free MD" available for emergencies/pacu from 7-3pm. Top 5 population area.

It wasn't in our contract, but when we were negotiating with the hospital, they made it clear that they would vigorously oppose any attempt to go this route. Makes sense. The first things that an AMC is likely to do is sign docs and CRNAs and get them to sign a noncompete. Also leverage the private payors, which the hospital will have mixed feelings about since they are also competing for some of the same dollars.

 

[BLADEMDA]

There is nothing in the contract which prevents mergers with other groups. The best approach is to merge with the other large group in order to negotiate higher reimbursement from the insurance companies. Essentially, don't sell out to an AMC but become an AMC like the group in Nashville.

 

[aneftp]

There is nothing in the contract which prevents mergers with other groups. The best approach is to merge with the other large group in order to negotiate higher reimbursement from the insurance companies. Essentially, don't sell out to an AMC but become an AMC like the group in Nashville.

Yes. That's what they thought about doing a few years ago. Merging with other big MD group. But no one wants to disclose the financial books with their competitors.

It's so dysfunctional when u are dealing with so many "chefs in the kitchen" mentality with 32 plus "equal partners" plus employed MDs 20 of them. Everyone has different agendas. Not like a top heavy ACT model with maybe 3-4 docs with super voting rights and 8-10 full partners and 20-30
Plus Crna's. Those practices are more amendable to merging or selling.

Due to vast differences in ages in many of the partners. The younger ones who make in excess of $700k plus working 65-70 plus hours a week don't want to sell or even merge and the older partners (my sister is 49) like my sister who are drastically cutting back work. So it's something like 70% younger partner docs (less than 45 years old).

I think if majority of group were older they would have sold out years before.

Now the market forces are closing in.