Merger and Acquisition – Physician Practices
The merger or acquisition of a physician practice is a complicated transaction. A process needs to be established that allows for both parties to reach a fair resolution. To complicate matters, there are issues at a federal and state level of “fair value” relative to the compensation paid to the physicians in the transaction.
The process that we see in the marketplace today that has been effective for both parties is as follows:
- Perform a due diligence review for both parties.
- Decide which business model is appropriate (i.e., acquisition, leasing or hybrid)
- Negotiate a compensation plan with the physicians.
- Set up a term sheet outlining key aspects of the business agreement.
- Set up a letter of intent and attach the term sheet.
- Finalize an employment or leasing agreement.
In this series of short videos, we summarize and describe the process and the various business models available in today’s marketplace. For more information about the process to negotiate a potential merger or acquisition of a physician practice, please click on the links below.
EisnerAmper provides an overview of all the steps in negotiating an M&A with a Health System. EisnerAmper has years of experience in the health care field providing business services to multi-hospital systems, pharmaceutical firms, surgery centers and physician practices.
Physician practices negotiating an acquisition by a Health System. We discuss why the pure acquisition option is the favorite for most health systems. Physicians and their staff become employees of the health system and the physician practice will be liquidated.
In the video series, Physician Practices Negotiating an M&A with a Health System, explain the difference between acquisition and leasing options. In the physician practice lease model, the physicians and their staff remain employees of the physician practice.
In the video series, Physician Practices Negotiating an M&A with a Health System, we discuss the benefits of a hybrid option where the physician practice is owned by the health system, but the practice remains so physicians can keep putting money into their pensions.