Today’s complex regulatory healthcare environment makes it increasingly difficult for small, specialty medical practices to manage administrative requirements efficiently. Many want to focus on the practice of medicine instead of the business of medicine.
The goal of medical group consolidation is to create the highest value for both the buyer and seller. The buyer is looking for assurance that the medical group under consideration understands and values good medicine and sound risk management practices. In order to become a “good risk,” medical groups need to consider implementing the following best practices:
- Champion patient satisfaction. A satisfied patient is less likely to make a claim and seek financial damages, resulting in reduced frequency and severity of loss.
- Actively Engage in Risk Management. Implement risk management activities, education and practice protocol enhancements to monitor and directly reduce the cost of loss and manage trends in losses.
- Quantify Risk. Quantify claims management and loss control programs to reduce losses and insurance premiums.
- Plan for the sale of the practice. Price an exit plan into your insurance coverage structure and pricing.
Insurance Broker Responsibilities to the Seller
In order to help clients achieve optimal valuation, the insurance broker working with the practice should implement a risk management program that includes the following:
- Provide root cause analysis of all claims and physicians to target areas of concern.
- Negotiate insurance premium modifiers and appropriate premium credits.
- Determine loss control needs.
- Assure comprehensive claims management is in place.
When a prospective seller engages in an effective risk management program that rewards good medicine, it earns the group the lowest responsible insurance premium. This ultimately increases profitability for both the buyer and seller.
Contact your HUB healthcare specialty practices consultant to discuss your future acquisition plans and determine your medical group’s preparedness to take the next step.