Although transactions can be an effective method for hospitals to coordinate care, expand patients' access and add service lines, they may also generate anxiety and worry within the physician community and hospital staff. Since physicians play an integral role in hospital operations, they can be a strong force for or against a potential hospital transaction. If the physicians are not on board, their opposition could become a barrier and greatly slow down or stop a transaction.
Common physician concerns
Physicians may push back on transactions for a variety of reasons. Some community hospitals allow physicians a greater amount of freedom and this freedom may be threatened by a transaction. "[The physicians] may be concerned that a new owner may not value them as much as the current hospital administration. In addition, if the hospital has historically let the physicians practice in a certain format with certain services, they may be worried that this will discontinue under a new owner or operator," says Scott Becker, JD, CPA, partner at McGuireWoods.
In addition to concern over future services of the hospital, physicians may have a variety of questions that could spur anxiety over the proposed deal: Will the new owner recruit new physicians and bring more competition? Will the method of suggesting new equipment and medical devices change and affect physician control? Will the new owner change current hospital-physician agreements?
Problems with physician pushback
While physicians do not usually have legal power to stop a potential deal, they could become a barrier for the transaction's completion, especially if the hospital is highly dependent on a small number of physicians.
"Usually [the physicians] don't have a way to stop a deal. However, since transactions usually require state approval or attorney general approval, they could launch opposition in those ways," says Mr. Becker.
In addition, if a potential buyer hears about strong opposition from physicians or even hospital staff, they could lose interest, especially if that hospital is reliant on those groups. "If the potential partners perceive the staff or physicians as opposed to the deal, they could become concerned and quickly lose interest," says Mr. Becker.
Recent example: Abington Health, Holy Redeemer Health partnership
Toward the end of June, Abington (Pa.) Health — owner of Abington Memorial Hospital — and Huntingdon Valley, Pa.-based Holy Redeemer Health System announced their intention to partner and create a new regional health system. Under the deal, Abington Memorial Hospital would have stopped performing abortions to comply with Holy Redeemer's Catholic doctrine.
The plan spurred strong opposition from approximately 150 physicians affiliated with Abington Memorial. Abington Memorial CEO Laurence Merlis also received many letters, emails and social media messages from women's groups, professional organizations and community residents opposing the potential partnership. In addition, physicians complained that they were not consulted before Abington and Holy Redeemer signed a letter of intent.
Less than a month later, Holy Redeemer and Abington Memorial announced they were canceling their proposed deal. Although no specific reason was cited, it is likely that the strong physician and community opposition was a factor in the decision.
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