Hospital-Physician Disengagement – Say that Again?

Over the last few decades, conversations relative to alignment between physicians and hospitals have become increasingly more common, with providers seeking new and alternative ways to partner. While the dialogue has shifted from discussions solely about employment (i.e., the 1990s to early 2000s) to more innovative models (common in the most recent decade), the core tenet has rung true – hospitals and physicians are looking for ways to integrate.It may be surprising, however, for hospitals and providers to hear that there is a recent uptick in practices and hospitals that would like to disengage.

You read that correctly! Over the course of the past few years, Coker has experienced a spike in the number of practices that want to unwind their previous alignment arrangements and become independent again. Though, when evaluated from a strategic perspective, and taking into consideration the changes in the healthcare industry, this shouldn’t be entirely shocking.As the healthcare industry becomes more focused on value-based care (versus volume-based), all organizations need to find ways to reduce costs and control their care delivery. As a result, many hospitals are considering alternatives to traditional care via standalone structures (i.e., ASCs, PCMHs, etc.) and contemporary provider models (i.e., CINs, ACOs, etc.). Likewise, providers realize they no longer need the infrastructure (and corresponding expense) of a hospital or health system to be successful. Moreover, becoming an independent practice may offer unique ways to achieve these goals.

While it is not necessary (nor advisable) for all practices to seek disengagement from their hospital partner, we do believe that there are more options available to providers who wish to pursue this course of action than there have been previously. With that said, we emphasize the seriousness of the consideration, and it is one that will likely require a team of expert consultants and legal counsel to effectuate. If separation fits within your practice’s strategic interests, we recommend you consider the following five factors:

1. Ability to partner, post-disengagement, with your hospital on other initiatives.
2. Financial stability of the practice and historical success in community.
3. Risk aversion of providers and willingness to engage in such activities.
4. Your current market and whether payers in your geographical profile are willing to participate in alternative payment models.
5. Overall operational effectiveness of the current practice.