Eyeworld

68 | EYEWORLD | OCTOBER 2019 I N THE PRACTICE by John Pinto and Corinne Wohl, MHSA PRACTICE TUNE-UPS volume to substantiate large capital invest- ments. • In managed care-intense markets, access to patients is controlled by locally dominant practices and health systems, obliging bou- tique-scaled practices to "join or perish." • Finally, there is the relatively new draw of private equity firms and large entrepreneurial private practices, which for better or worse provide a powerful financial incentive for older surgeons to aggregate into regional supergroup practices. Cooperation between private practices and other market participants can be mapped on a continuum, from the lightest mutual aid to full- blown economic consolidation. Informal or modest reciprocity This is when two practices or their providers informally agree to cover each other's practice, share call coverage, not recruit each other's staff, or send referrals back and forth in some appropriate way. It usually involves some ele- ment of quid pro quo benefit to both parties. This could be a relationship between a mid-ca- reer doctor and a late-career doctor, who wants to send out difficult cases or have vacation coverage. It may be accompanied by a purchase option agreement. Formal mutuality or reciprocity This can be under the formal banner of an Independent Practice Association (IPA, for managed care contracting) or a Management Services Organization (MSO, to pool billing, call center, marketing, and other services). Oth- er examples are when a retinal surgeon works part time in a generalist's office for a percent of collections, or when a dominant regional practice sells management services to smaller practices locally to coax them toward deeper engagement. Deeper sharing When practices deepen their strategic rela- tionship, it can include the fractional sharing of providers, equipment or facilities, or jointly marketing a patient service. Many independent B usiness consolidation is as old as business itself. Some consolidation works like magic, for example, the folding together of Disney and Pixar and the merger of Exxon and Mobil. Other times, not so much, for exam- ple, Mercedes-Benz and Chrysler and Target and Sears. Consolidation has benefits and costs. The- oretically, larger businesses like those plumping up in healthcare today can be run more rational- ly and at less cost. But as customers, all of us have personally experienced the downside of growth and con- solidation—a favorite mom-and-pop restaurant that opens a satellite then folds in a year or a quaint hotel ruined when it is swept up into a corporate chain. Consolidation in eyecare and specifically in ophthalmology is driven by numerous factors. In the following list, it's clear that some factors are old and others new, and many of these fac- tors are increasing in strength. • An aging cohort of eye surgeons is looking for an exit strategy, but it is difficult as there are a declining number of new replacement ophthalmologists, and younger doctors desire an improved life-work balance. With tradi- tional doctor-to-doctor succession harder to achieve, smaller practices are seeking out larger practices, institutions, and corporations for a buy-out. • Regulatory, payer, and other business burdens are making it harder to run a small-scaled practice. By gathering into larger groups, supported by a deeper administrative and advisory bench, doctors can play strength-to- strength in a challenging environment. • The polymath, comprehensivist surgeon is yielding to an era of subspecialty care. Some would argue that better care is provided by a team of generalists and subspecialists under one roof, rather than having unaffiliated pro- viders scattered among various small practice entities in town. • An accelerating pace of expensive technical sophistication is leaving behind surgeons working in settings where there is not enough Practice consolidation: Responding to a growing trend About the sources Corinne Wohl, MHSA President of C. Wohl & Associates San Diego John Pinto President of J. Pinto & Associates San Diego

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