The physician landscape is becoming increasingly organized, professionalized and commercialized. Physician organizations across all specialties face increasing demands for technology infrastructure, rapid changes in medical science, more rigorous standards of care, complex coding and billing requirements, and a gradual shift to value-based care. Traditionally small, physician groups simply do not have the financial or operational wherewithal to keep up with the pace of evolution.
With scale, ability to invest and operational acumen, however, physician groups will be able not only to address increasing performance requirements, but also to exploit the tremendous value-capture opportunities in value-based care as well as in adjacent products and services. In the next 20 years, we expect most every specialty will have large physician enterprises representing 50% to 70% of the practicing physician base.
L.E.K. has supported advancing physician enterprises for over 25 years, starting in the original period of corporatization in the 1990s. We have completed approximately 100 transaction-related and commercial due diligence projects for physician practice management organizations, physician groups and related entities across approximately 75% of key physician specialties for strategic and financial investors.
Leveraging our extensive experience and reflecting our commitment to supporting physician enterprises through this transition, we launched the Physician Practice Management (PPM) Insights Center. The PPM Insights Center supports the development and dissemination of best practices across enterprises. We work with growing physician groups, larger physician enterprises, corporatized specialty care providers, tech-enabled suppliers and the investors funding this transition to make the critical strategic decisions fomented by the rapid evolution of this healthcare services sector.
Key questions and challenges
Our experienced professionals have a deep understanding of the challenges participants in the physician enterprise space will need to navigate. Key issues include:
- Practice development (for groups building toward a sale or IPO)
- How do we develop the organization and capabilities needed to sustain growth?
- How can we enhance our market position in each local market?
- Which new geographies are most attractive, and what is the optimal entry strategy?
- What business plan will enable our enterprise to meet our growth objectives?
- What corporate structure and physician compensation models best support our objectives?
- How do we optimize our referrer and patient engagement models to maximize growth and utilization?
- Physician enterprise development (for rapidly growing scale enterprises)
- Which markets should we prioritize for geographic expansion?
- How can we optimize our business processes to enhance performance and lower cost per unit (e.g., clinical staff configuration and scheduling, physician management, revenue cycle management, payer contracting, business development)?
- What value-based care opportunities should we pursue?
- How can we maximize ancillary and adjacent business opportunities?
- What other practices are available and should be prioritized for acquisition?
- How can we turn around underperforming parts of the business?
- How can we leverage scale to deliver value to physicians and improve patient outcomes?
- Vendor support
- What is the current addressable market for each service, and where should we invest to grow?
- Which customer segments represent potential for outsized adoption and growth?
- How can we improve our competitive positioning?
- What are the current unmet needs and areas for improvement/expansion?
- What adjacencies should we prioritize for development?
- How can we drive margin improvement?
Examples of our work
To learn more about how we help clients create value, please refer to these case examples:
- Collaborated with a leading multispecialty PPM organization to develop an organic and inorganic growth strategy, optimize operations, refine the organizational structure, and institute a more rigorous and disciplined acquisition process. The client grew profitably, became a publicly traded company and was acquired by a strategic buyer at an attractive valuation.
- Provided strategic planning and operational improvement support to a provider of anesthesia and chronic pain management services, including strategy development, revenue cycle management improvement, model practice development, geographic market assessment and vendor due diligence.
- Completed commercial due diligence of a dermatology practice that served as a platform investment for a private equity firm, and conducted multiple subsequent company and market due diligence projects to facilitate add-on acquisitions of dermatology practices.
- Analyzed sources of variance in admissions and bed days across markets, and developed a performance improvement plan based on organizational and industry best practices (including a significant focus on the role of post-acute care in reducing readmissions), to facilitate value-based contracting for a leading Southern California multispecialty medical group. The client improved performance and was subsequently acquired by a leading healthcare services organization.
- Completed commercial due diligence of an orthopedics PPM organization, including analysis of the market for physician practice management, the current business model, leadership and operational capabilities, and potential synergies with the investor’s current domestic and international investments.
- Completed a comprehensive assessment of the cardiology market, including size, segmentation, growth drivers, reimbursement dynamics, competitive environment and value proposition, for an Australian cardiology group considering the sale of its business. After our analysis, the client elected not to sell the organization and, in fact, pursued international growth opportunities.