Consolidation in the healthcare industry continues unabated as national and regional hospital groups continue to increase their breadth of offerings by acquiring other groups, standalone hospitals, physician practices, home health agencies, senior living communities, and whatever else can fulfill their needs. Constant needs for capital investment and negotiating power with insurers have convinced the industry that bigger is better and survival requires volume. So how can smaller hospitals and physician practices compete and thrive in such an environment? There’s no easy answer to that question.
Affiliation and Specialization
It may seem counter-intuitive, but many smaller hospitals and practice groups have fared well by affiliating with their larger competitors who are trying to acquire or defeat them. When you’re smaller, it’s hard to contend with the sheer breadth of services or size of hospital systems. Specialization becomes essential. If your group can fill in a niche service area that’s lacking in the community, then a partnership of sorts could prove mutually-beneficial, as an outlet for positive care for the larger group, and as a source of much-needed referrals and census for the smaller provider. Choose your discipline areas wisely and focus your energy and time to create distinct differentiations that make your continued success essential. We’ve seen this work in some specialty surgeries, rehabilitation, emergency care, senior care, and various therapies.
Embrace Technology and Innovation
The larger groups have the capital needed to meet electronic health record requirements and to respond to other government mandates and regulatory changes, but they lack the nimbleness that smaller groups have. Stay abreast of emerging technology trends, such as telemedicine, that can provide you access to new groups of patients that you’d otherwise never see. If you’re an early-adopter of game-changing technology, you can create barriers to entry that effectively keep your larger competitors at bay. There are also forward-thinking visionaries who may disrupt the entire healthcare world. These are relative outsiders that are accustomed to revolutionizing marketplaces. Be aware of what they’re working on, be they small clinics in their physical locations (Wal-Mart), ways to current insurance reimbursements (Amazon), or something else that none of us are even thinking about yet (Apple) and identify (early on) if you can somehow fit into their grander plans.
Results and Service Matter
Healthcare reimbursement continues to evolve over time, with more and more payors seeking to move to a more value-based billing methodology, as opposed to traditional fee-for-service-based models. Instead of being paid for the number and type of services provided, outcomes and results will start to determine reimbursement amounts. Be on the forefront of focusing on true patient care and results. This will help maximize your payments in coming months and years. We all know of horror stories in patient mismanagement and care at larger groups, where often it seems that patients are lost in the gigantic shuffle. By being smaller, you can provide more direct and personalized attention that can help to distinguish you from your competitors. Reduce wait times, return calls timely, truly coordinate care with other providers, and take a genuine and holistic interest in the needs of your patients. In this online-savvy world, ratings and feedback matter. Do whatever you can to improve your “scores” to attract new patients seeking a better and warmer experience from their current healthcare provider.
Healthcare continues to be a challenging field. An aging population, rising costs, increased government regulations, stagnant reimbursement rates, constant litigation, patient-directed services, and many other challenges await all healthcare providers, from the sole practitioner to the largest hospital group. To succeed as a smaller player, there’s much less room for error. Be diligent, craft a smart and inventive strategy, think outside the box, and commit to your long-term strategic goals. Finally, keep open lines of communication with other potential strategic partners and if all else fails, you may need to look for other alternatives.
Matthew Burke, CPA, CFE
Matt specializes in providing Cerini and Associates’ diverse array of midsized business clientele and nonprofit organizations with valuable consulting and assurance services. He prides himself on value-added, responsive, and innovative service to his clients; with a focus on forward-thinking and creative solutions. Matt joined the firm in 2002 and has years of experience with many types of complex accounting, auditing, compliance, and general business matters that impact entrepreneurial, established, and nonprofit businesses.