Anatomy of an Acquisition Alternative: Leasing the Practice

The default position of many healthcare systems seeking physician alignment is to acquire the practice and employ the physicians, but there is another approach that poses far less firancial risk to both parties and is far easier to undo if necessary: leasing the practice. The group stays as it is, but renders services for which the hospital receives the reimbursement and commits to paying the group a fixed amount for a stable quantum of work. Additional alignment features can be added, including medical directorships, comanagement, quality bonuses, and more. Potential problem areas include post-termination restrictive covenants and dispute resolution. Planning in advance for both fair market value disputes and addition of new practitioners is useful.