The healthcare industry is rapidly changing for hospital-based physician practices. An overall trend of consolidation has emerged as the industry transitions to a value-based model.This has led to the creation of large, single-specialty companies with as many as 1,500 physicians, as well as large, multi-specialty management companies such as Sheridan Healthcare, Team Health and Mednax. These national companies claim to provide greater economies of scale and resources to serve hospitals more efficiently than smaller, local, single-specialty groups.
Thus far, the formation of these companies has largely affected specialties outside of radiology—primarily anesthesia and emergency medicine. We predict, however, that this trend which has played out in other specialties is quickly approaching radiology practices.
Traditionally, radiology groups’ primary competitor has been the radiology practice across town. Today, however, radiology groups are no longer each other’s only competitor. The competitive landscape now includes the hospital’s anesthesia or emergency medicine group who potentially belongs to a larger, multi-specialty company.
The “Super-Group Solution” Claim
These management companies are already entering the field of radiology. Both single-specialty groups like Radisphere and multi-specialty groups like Sheridan Healthcare are arguing they provide hospitals a type of “super-group solution” for radiology. These larger, national companies are able to gain respect and attention from hospital administration while also meeting the hospital’s coverage needs. By claiming they provide a larger pool of resources, a streamlined management process and greater economies of scale, companies like Sheridan Healthcare may appear to be a safe choice for hospitals during these chaotic times of change.
The Concept of “Synergy”
Hospitals expect their physicians to work cohesively and efficiently with one another and with hospital administration to provide exceptional patient care. The multispecialty management companies have a unique claim in that they’re often pitching more than one service line with the same value proposition. These companies then argue that using streamlined processes, technology and management across specialties provides a more cohesive and efficient staff for hospitals. By cross-selling their services, they market a kind of “synergy” which threatens the local, single-specialty groups.
An Alternative Solution
Through all of this change, however, emerge a variety of collaboration models proven to be highly effective in competing against these larger companies while allowing radiology practices to remain independent. Partnerships or joint ventures with other like-minded radiology practices offer the opportunity to become a strong market player with the resources and technologies necessary to defend against the trend of consolidation. The mantra “Medicine is local” can indeed still ring true today.