Wednesday, January 19, 2011

Medical, dental practices are popular targets for acquisition

More doctors are opting to collect a paycheck, instead of managing the checkbooks for their practices, as medical groups have become hot acquisition targets.
Mednax closed 15 acquisitions of pediatric and anesthesiology practices in 2010, giving it 150 such purchases since it went public in 1995. Steve Collins, senior VP of business development for the Sunrise-based company (NYSE: MD), said the uncertainty of health care reform and the economy has encouraged doctors to link up with a strong company to manage their practices.
“Probably the biggest thing when we look at a physician group is high-quality and well-managed groups,” he said. “We augment and enhance what they have in place, instead of finding a practice that is broken and trying to fix it.”
Other companies have taken a similar approach in appealing to doctors. Miami-based Continucare Corp. (NYSE: CNU) bought 58 sleep diagnostic centers in three deals last year. West Palm Beach-based Metropolitan Health Networks (AMEX: MDF) has purchased three primary care physician practices since the start of 2010. Fort Lauderdale-based Phoenix Physicians, which owns emergency medicine and urgent care practices, added 12 doctors last year to reach 400.
Kendall-based Towncare Dental Partnership started in 1995 with four offices and grew to 45 practices in South and Central Florida through acquisitions and openings. Towncare President Mike Bileca said it generated $63.5 million in revenue last year.
After securing a $15 million senior ...
More doctors are opting to collect a paycheck, instead of managing the checkbooks for their practices, as medical groups have become hot acquisition targets.
Mednax closed 15 acquisitions of pediatric and anesthesiology practices in 2010, giving it 150 such purchases since it went public in 1995. Steve Collins, senior VP of business development for the Sunrise-based company (NYSE: MD), said the uncertainty of health care reform and the economy has encouraged doctors to link up with a strong company to manage their practices.
“Probably the biggest thing when we look at a physician group is high-quality and well-managed groups,” he said. “We augment and enhance what they have in place, instead of finding a practice that is broken and trying to fix it.”
Other companies have taken a similar approach in appealing to doctors. Miami-based Continucare Corp. (NYSE: CNU) bought 58 sleep diagnostic centers in three deals last year. West Palm Beach-based Metropolitan Health Networks (AMEX: MDF) has purchased three primary care physician practices since the start of 2010. Fort Lauderdale-based Phoenix Physicians, which owns emergency medicine and urgent care practices, added 12 doctors last year to reach 400.
Kendall-based Towncare Dental Partnership started in 1995 with four offices and grew to 45 practices in South and Central Florida through acquisitions and openings. Towncare President Mike Bileca said it generated $63.5 million in revenue last year.
After securing a $15 million senior debt facility from PNC Bank, Bileca said he plans to double its number of practices in the next three-and-a-half years, including the addition of seven or eight locations in 2011. That should mean at least 75 new jobs, he added.
“With the right doctor an acquisition can add a tremendous amount of value and get significant growth for doctors.,” Bileca said.
A lot of dentists are willing to sell their practices so they can be relieved of the burden of handling administrative duties and concentrate on seeing patients, Bileca said. Towncare, which started a dental office manager training program to ensure it could find qualified staff, has begun converting practices to digital imaging equipment and records.
Dentists can retain a minority stake in the practice and share in the profits.
At Mednax, physicians sign long-term contracts as salaried employees and don’t retain ownership, but they can participate in an incentive program where they benefit from the success of the practice, Collins said.
“The ideal of a sellable practice holds appeal to someone close to retirement,” he said. “These physicians built a practice over many years and have no way to realize that value if they retire.”
Mednax has been using electronic medical records since 2000 and has built up a clinical database of more than 13 million patient days in neonatology.
An Iowa physician for Mednax’s Pediatrix subsidiary started the 100,000 Babies Campaign to use information from the company’s database to establish guidelines for saving premature babies.
Most small physician practices don’t have access to such a large medical database, and implementing electronic medical records is prohibitively time consuming and expensive.
“When you look at how health care is paid for and reimbursed, to be able to not only say you are high-quality provider, but to demonstrate and show it with actual data is something we are able to do very well,” Collins said.

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