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How a Physician Practice Can Negotiate an M&A Project with a Health System - Option 3

What are the Business Model Options that physician organizations have?

Option 3: The Physician Practice Hybrid Mergers and Acquisitions Model

There are some physicians that have pension plan arrangements that are significant, where a physician will put from $30,000 to $50,000 a year away for retirement. What the health systems offer vs. what the physicians, themselves, can put away in their own practice may differ, and the physicians would not be able put away as much money as they would like to.
  
Depending on the health system, they may put together what's called a group of friendly PCs, where the entity comes under the health system.  The physician practice is owned by the health system, but the practice stays up and running to allow the physicians to remain as employees of that practice, so they can keep putting the maximum amount of money aside for retirement. However, the physician practice’s staff becomes employees of the health system. The main function of this hybrid model is to allow the physicians to continue to benefit from the higher pension plan contribution limits.  


Transcript

0:00   One more option, which is really just kind of a little differentiation on the acquisition model, we just call it a hybrid model. Basically what happens here is there are some physicians that have pension plan arrangements that are significant where they'll put $30, $40, $50,000 a year way for retirement.


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