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Trends in Integrated Healthcare Delivery: Hospital-Acquired Physician Practices Unprofitable; Experts Explain Why

Manasquan, N.J. -- Integrated healthcare delivery systems (IDSs) have continued to develop and expand their market reach through partnerships and acquisitions of physician medical groups.

However, IDSs must remember that while these deals may look appealing at first, close and careful scrutiny is the key to being successful in the next few years, according to The Managed Care Information Center (MCIC).

MCIC's monthly publication The Executive Report on Integrated Care and Capitation offers concise and comprehensive analysis and discussions of some of the most recent reports and studies that affect IDSs. For example, a recent issue analyzed a study by Irving Levin Associates Inc., which showed that mergers and acquisitions among physician medical groups are up accounting for 155 of the more than 600 publicly announced healthcare mergers and acquisitions during the first and second quarters of this year.

Another study discussed in The Executive Report on Integrated Care and Capitation showed a decline in the number of physicians being acquired by hospitals over the last four years.

Additionally, the Deloitte and Touche study showed that over the last two years, more than three out of every four hospital-acquired physician practices operated at unprofitable levels.

One potential reason for the failure of many practice management acquisitions is because "all too often hospital leadership has a limited understanding of physician business economics," F. Kenneth Ackerman Jr., and Keith Moore, both vice presidents with the Washington, D.C.-based management and research consulting firm McManis and Associates/MMI, told The Executive Report on Integrated Care and Capitation. Some other reasons may include, but are not limited to: over-valuing the worth of the practice; poor group compensation design; and vague or unclear medical group performance expectations.

Readers of The Executive Report on Integrated Care and Capitation recently learned how hospitals can turn their under-performing medical groups into assets for their IDS, with advice offered by McManis and Associates/MMI.

One key to success is to do a quick assessment of the physician practice's overall operations, examining whether the organization is properly designed, i.e.: physician governance structure and attainable performance expectations. Another key is to make sure IDSs have a focused, investment-oriented strategy, as well as ongoing performance monitoring and improvement efforts.

Industry trends concerning the profitability of IDSs-acquired physician medical groups represent just one of the many critical issues discussed each month in MCIC's publication, The Executive Report on Integrated Care and Capitation. Each month, the editorial staff works to identify and research the latest issues affecting IDSs and capitation rates. In addition, each issue of The Executive Report on Integrated Care and Capitation offers clear, concise and practical information on the issues identified from some of the most prominent IDS experts. The introductory price for the newsletter is $207.

For more information contact: MCIC, 1913 Atlantic Avenue, Suite F4, Manasquan, NJ 08736; (888) 843-6242, fax (888) 329-6242, e-mail

For more information contact The Managed Care Information Center, 1913 Atlantic Avenue, Suite F4, Manasquan, NJ, 08736, toll-free telephone 1-888-THE-MCIC (1-888-843-6242), fax 1-888-FAX-MCIC (1-888-329-6242), e-mail or online at

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