April 1998 Bulletin

What to know before signing merger, buyout

Lured by the promise of strength in managed care negotiations and an opportunity to gain greater market share, more and more orthopaedic practices are seeking relationships with other practices or with physician practice management companies. But after the paperwork is signed, many practices find themselves stuck in arrangements that are a far cry from "marriages made in heaven." An Academy course, "Options and Opportunities in Consolidating Markets: Orthopaedic Mergers and Buyouts," will explore the promise as well as the pitfalls in mergers, joint ventures and affiliations.

The course, which will be offered in six cities, beginning in Chicago on May 30-31, 1998, teaches surgeons to evaluate various consolidation models for their practices; conduct a premarket analysis and discover ways to resolve postmerger dilemmas; identify methods to assess their practice’s value; and assess the financial and legal implications of physician practice management acquisition.

"When practices decide to merge, they often fail to adequately analyze the market or look at their own needs sufficiently to tell where they need help," says David A. Wong, MD, course chairman, whose practice was part of a six-practice, full-asset merger in Denver. "Often, they neglect to seek advice from other physicians who have gone through the process and outside experts who can help with the process." The result is often clashing of personalities, values, and business styles that threaten the success of many arrangements.

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