10 tips to get the best integration agreement
Bottom line: Be prepared to walk
A major decision facing many practices is whether they should merge with another practice or become affiliated with an area hospital, practice management company, or other provider organization to gain the critical mass often needed to thrive in today’s medical marketplace.
Here’s some practical tips gathered from different experts that will help practitioners maneuver their way through the integration decision-making process.
1. Choose the right partner. The more compatibility and professional chemistry there is, the more likely the deal will be a success. Each side should share its operating philosophy and goals — along with recent business plans — to help see if the goals and expectations are compatible and realistic.
2. Expertise. What experience and expertise do they bring to the partnership you do not have?
3. Financial. What are your future partner’s financial strengths and weaknesses? In short, do you feel they have both the commitment and the resources to make this deal work?
4. Appoint a leader. Select a representative from your group to facilitate the deal. This person’s job is to see that your side is organized and informed while working to build trust and rapport with the contracting hospital or system.
5. Obtain legal advice. Bring your legal advisor in early. An attorney — ideally with extensive health care experience in the particulars of your deal — can help shape the agreement from the beginning, protecting your interests and goals. But also remember the MBA school saying: "It’s more in the typical lawyer’s nature to be a deal breaker rather than a deal maker." That means that lawyers are taught to look for what might go wrong, but not how to make something happen. Therefore, keep focused on what you can do to get what you want.
6. Involve decision makers. Be sure all your key decision makers and other physicians are involved and informed about the negotiating process so everyone is on the same page.
7. Write it down. As the negotiations proceed, create a written nonbinding memorandum of understanding outlining the items and issues you have discussed and agreed on, such as who contributes what capital, who gets what stock, how is profit sharing constructed, etc. Those should also list the items on which you are still a part. Besides creating a tangible document showing where you are in the talks, this kind of exercise can also help trigger new ideas about now to bridge differences.
8. Watch the clock. You don’t want to rush hastily through the process since this can result in critical items being overlooked or not even getting the proper consideration. At the same time, it’s important to keep the negotiations focused and moving along at a steady pace to maintain interest and momentum.
9. Resolve any in-house issues first. If various solo physicians and smaller practices are to be assembled into a larger group practice, for instance, make sure you have worked out your own related internal issues before proceeding to avoid delaying, or even jeopardizing, the larger deal.
10. Know what your options are. Anticipating and evaluating what kinds of alternatives are available to you as you reach various decision points in your discussions will help you make the right choice. Remember: one choice that’s always available is to simply do nothing.
Indeed, no deal is better than a bad deal — so be prepared to walk away rather than negotiate yourself into an agreement that is not in your best interest.
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