Large single-specialty practice
Consolidation of independent practices has been evident for 20 years and has accelerated as physicians in smaller practices have aged and burdens of practice have increased. Now, most urban centers have large mega-sized practices or super groups that have grown through practice mergers, acquisitions, and successful recruitment. Large practices can be modeled as a single integrated corporation (with ancillary components such as an AEC or infusion center) or as individual business units that are grouped under a single corporate entity.6
Within these large and mega-sized practices, differing employment options have emerged in addition to the traditional partnership track. These include payment on a per-diem basis, annual salary, or a mix of both. As opposed to partnership, the employment track avoids responsibility for governance and corporate liability, although not individual liability, and usually does not involve after-hours call. An employed physician usually does not benefit from ancillary income that derives from AEC facility fees, infusion centers, and pathology and anesthesia services.
Private equity ownership of gastroenterology practices
In June 2016, private equity entered the GI space with the investment of the Audax Group in a community GI practice based in Miami, Florida. The term private equity refers to capital that is not reported in public forums and comprises funds that investors directly invest into private companies or use to buy out public companies and turn them private.
According to their website, when the Audax Group invests in a medical practice, they provide capital for substantial infrastructure support, business experience, and acumen, but retain medical practice leaders as their clinical decision makers. They also bring proven expertise and economies of scale to resource-intensive aspects of a medical practice including information technology, regulation compliance, human resources, revenue cycle management, payroll, benefits, rents, and lease as examples. These components can be difficult to manage efficiently within independent medical practices, so many maturing practices are selling their practices to regional health systems. This multistate equity-backed medical practice is an alternative to health system acquisition, and may help physicians feel more in control of their practices and potentially share in the equity investment.
It is important to understand the employment structure and associations of any practice you are contemplating joining. The model devised by this group is meant to retain physician authority and responsibility while providing capital to support innovation and the development of needed infrastructure. Growth of market share and revenues can accrue back to physician owners. This is distinct from practices that are part of a health system in which there may be more of a corporate feeling and centralized governance.
