Option 2: Partner with a hospital
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Pros: If you decide to partner with a hospital, your practice will likely remain in an existing network, with little or no disruption for your current patients. In addition, you will likely have a stable referral base. Finally, being part of a larger organization may include additional benefits, such as access to capital and more leverage in contract negotiations.
Cons: Patients with kidney disease can require complex, expensive treatment. As such, nephrologists are often viewed by hospitals as “cost containers,” rather than big revenue generators, which more typically describes cardiologists and oncologists. This dynamic can have several important implications in a hospital partnership.
- Compared to other specialties, nephrology may not experience the same flow of revenue from shared savings agreements, which are becoming increasingly popular as reimbursement shifts to value-based payments.
- Since hospitals encompass many different providers, nephrology’s voice at the table may be diluted.
- Although hospitals may have more leverage in contract negotiations, they have to balance the needs and economics of multiple specialties. This may result in agreements that benefit the larger revenue generators at the expense of nephrologists.
- The future of hospital partnerships is unclear. In some parts of the country, hospitals are in the midst of divesting nephrology practices they had previously acquired.
Option 3: Partner with a kidney care provider
This is a newer and growing option that solves for unique subspecialty needs, much like The US Oncology Network.
Pros:
- Partnering with a kidney-centric entity can provide specialized insights for your practice — both through tailored data reports and renal-specific management teams.
- It may be easier to access capital for growth and strategic investments.
- Your practice governance remains generally intact and integrated into a broader strategic team
- When it comes to negotiating contracts, kidney disease remains the sole focus, meaning that nephrology does not have to compete with other specialties for attention (or dollars).
- There may be enhanced kidney care revenue opportunities, as well as cost savings associated with the economies of scale and purchasing power that national providers can bring to the table.
Cons:
- The practice, although functionally independent, exists within a structured framework, where the practice is accountable to the nephrology partner.
- Along with increased access to regulatory and legal expertise comes another layer of bureaucracy. While some practices find this oversight invaluable, it can also slow some processes and decisions.
It is also worth considering that a shift away from private practice can often also represent a shift in compensation. This can have both advantages and disadvantages. Today’s reimbursement models increasingly require physicians to take on some risk. That risk is mitigated in an employment model, though potential future upside is often shared.
Option 4: Merge with another independent nephrology group
Pros: Consolidating with another nephrology group in your community can provide multiple advantages, including increasing your leverage in contract negotiations and allowing you to capitalize on economies of scale. Merging with another nephrology group also allows you to partner locally with another organization that is specifically focused on kidney disease.
Cons: Mergers of any kind can be tricky, and this is especially true with physician practices that were previously competitors. Add to that potential cultural differences, and things can get downright contentious. Here are some questions to consider:
- Will this partnership help establish best practices?
- How is the potential partner viewed by others in the market?
- How will the new organization be governed?
- How will your practice be valued?
- Who will be make staffing decisions, and how will duplicative functions be addressed?
Pursuing a strategic partnership is a big decision – one that should not be rushed. Nonetheless, carefully weighing the pros and cons, as well as knowing the right questions to ask, will help ensure that you make the best decision for you and your patients.
Tune in to the final chapter of the divestiture series next month, as we cover in depth what to expect when choosing to partner with a large dialysis provider.
Robert Provenzano, MD, is vice president for medical affairs at DaVita Kidney Care in Denver. He also is on the editorial advisory board of Renal & Urology News.
Mark Hovermann, MBA, is Senior Director, Corporate Development.
Lanny Teets is Director, Transactions & Growth Initiatives, at Nephrology Practice Solutions.
This article originally appeared on Renal and Urology News
