Changing Market Group Culture The Business of Healthcare

Independent Anesthesia Group Success in a Segmented Market

October 10, 2012

It’s estimated that the large national anesthesia companies have around 10 percent of the market.

They certainly are on a drive to expand.

To a significant degree, this expansion is driven by private equity and in some cases publicly raised money.

But outside investors will only stay in the game as long as there are profits. When reimbursement for anesthesia services declines, as it will, many of these large groups will be in play or will break up under their own weight.  They are not too big to fail.

As to the position in which this leaves independent groups, there will continue for some time to be intense competition from national groups seeking to consolidate the market.

But, there will be hospitals at which reimbursement is very low and which require stipend support to staff under any circumstances.

With increasing reimbursement pressure, the larger groups will not find those sites attractive and may demand significant stipends to service those facilities. This means that local groups that have developed strategically to deliver a transformational experience customized for that facility may actually be in a better position than national groups to obtain stipend support from those facilities.

On the other hand, there will be facilities which require stipend support to serve but which cannot afford to pay it or which simply choose not to pay it. The advantage large groups have is that they will be able to refuse to do business at those facilities and yet still pursue many other opportunities.

There’s a valuable lesson in that for smaller groups: You, too, have to build a business that is greater than simply serving one facility. In other words, you have to begin finding other locations at which to do business even if, currently, that means leaving the sole facility at which you do business and moving to another to put yourself into a position from which to expand. You, too, have to be in the position of being able to walk from a deal if continuing to provide services there does not result in an acceptable profit.

If this doesn’t fit in with your business plan, then you may not be in business for long.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

www.weisspc.com

Leave a Reply