It seems as though merger and acquisition announcements in healthcare are happening weekly, as payers, hospitals and more join forces to become more powerful players in an increasingly complex healthcare environment.
What’s happening with the big corporations has trickled down to private physician practices. The trend to consolidate into larger groups of practices or enter into agreements with practice management companies has been going on for some time in other specialties. Now it’s taking hold in dermatology, according to Bill Southwick, CEO of QualDerm Partners, a company that develops dermatology practice partnerships through acquisition. Southwick presented, “Consolidation in the market. What does it mean to you?” during the March 2017 American Academy of Dermatology (AAD) annual meeting in Orlando, Fla.
Consolidation, Southwick says, is something many small and solo dermatology practices are considering.
“As dermatologists, the smaller you are, the less you ultimately could matter in a particular geographic area,” he says.
While some dermatology practices are trying to form their own groups, the most common approach is for practices to join with or be acquired by dermatology management companies, according to Southwick.
QualDerm Partners is among the management companies. Others include Advanced Dermatology, Forefront and U.S. Dermatology (formerly Dermatology Associates).
“By last count there are about 17 of us out there,” Southwick says.
Dermatologists’ ultimate relationships with practice management companies differ. Some sell 100 percent of their practices and become management company employees, who are under contractural terms and conditions.
“This depends on state regulations. Some states have what they call corporate practice of medicine rules, and you’re not allowed to hire a physician directly,” Southwick says. “There are other models where we look to partner with physicians, so we’re buying some of the practice with a purchase price of cash and the other part is shared equity in a joint venture.”