Predator or Prey?

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Curtis PickelleHere we go again: In a replay of the early, heady days when HMOs and managed-care models blurred the lines between payor and provider, we are again seeing health-care consolidation on a dizzying scale—which is almost obliterating that line completely. Two recent deals are emblematic of both the movement toward integrating into new models of care and the scramble for just who and what will define what it means to be an accountable-care organization (ACO).

Highmark Blue Cross Blue Shield (Pittsburgh, Pennsylvania) announced a deal to acquire the second-largest hospital chain in the region, the five-hospital West Penn Allegheny Health System (Pittsburgh), for $475 million.¹ In a hint that this is likely to be a trend with many dimensions, Highmark indicated in the article that it might buy or invest in other providers, including physician practices.

Not to be outdone, UnitedHealth Group (Minnetonka, Minnesota) has moved quickly to acquire not only hospitals, but also clinics—and now, even physician practices; it is launching physician-management companies (remember the physician-practice management craze?). According to a July 1 post at Kaiser Health News, UnitedHealth’s OptumHealth subsidiary is buying physician groups.

The article says, “Optum declined to discuss details, but documents show the company cut deals in California, Arizona, Nevada, and other markets. In Orange County, California, for example, Optum’s Collaborative Care unit acquired the management arm of AppleCare Medical Group and Memorial Healthcare IPA. While hospitals are widely seen as the natural leaders of ACOs, United’s strategy positions it to lead the new systems, too, a company executive acknowledged.”2

The issue has moved way beyond consolidation and the various implications of this trend. It is now about how to survive in an increasingly predatory environment. Hospitals are buying physician practices. Insurers are buying clinics, practices, and now, hospitals. Hospitals are moving to become insurers. Networks, alliances, joint ventures, systems, and vertical integration are all part of the daily changing landscape in the business of health care, and your chances of finding a way to thrive and ride the wave as part of the new reality will depend entirely on your ability to avoid being prey.

Don’t be taken by surprise. Pay attention to what is happening around you and to the deals that are unfolding all across the country on an almost daily basis. Get your strategic house in order, and articulate your vision for your organization in such a way that each and every person who works there can understand it and make it happen. Stay focused on how to take advantage of this current deal climate in a way that will help realize this vision.

Should you consolidate and merge with a larger group? Should you become part of a network or alliance? Should you do a joint venture? These and many similar questions have been part of the strategic-planning process in groups for several years, without much of a sense of urgency to get moving on any of them.

One thing is clear in this current landscape: A sense of urgency is a must. You need to underscore your vision and strategy with the right sense of urgency so that you can remain in control of your own destiny. If your vision is to remain independent at all costs, make certain that you know what it will take, in this new environment, to make independence a reality. It will take absolute focus, renewed commitment, and a passion for the business that will remain steadfast as the inevitable headwinds throw predictability out the window.

In truth, this is the most exciting of times to be in the radiology field. Opportunity still abounds—but don’t be asleep at the switch when the next big opportunity comes looking for you, or you just might end up being somebody else’s lunch.

Curtis Kauffman-Pickelle is publisher of ImagingBiz.com and Radiology Business Journal, and is a 30-year veteran of the medical-imaging industry. He welcomes your comments at ckp@imagingbiz.com.