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How a Physician Practice Can Negotiate an M&A Project with a Health System - Option 2

What are the Business Model Options that physician organizations have?

Option 2: The Physician Practice Lease Model

The big difference between acquisition and leasing is that in the physician practice lease model the physicians and their staff remain employees of the physician practice. The practice entity continues in existence as it always has, and the health system is actually leasing the physician and non-physician providers that can bill and provide services for a period of time.

A benefit of the leasing arrangement is that, at the end of the lease term, the physicians can go back into their practice as an independent organization and not have any commitments or ties to the health system. Mr. McLafferty also discusses some of the challenges in the leasing model. For example, the health systems may take over all of the billing and collection functions while under lease, but afterwards the physician practice may need to hire a third party firm to handle these duties, if the practice no longer has a billing department. 


Transcript

0:00   The second option that we talk about is leasing.  The big difference between acquisition and leasing is the physicians and their staffs remain employees of the physician practice. 


Michael J. McLafferty is an Advisor in the Health Care Services Group (HCSG) with years of experience in the health care field, providing business services to multihospital systems, pharmaceutical firms, surgery centers and physician practices.

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