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More consolidation and mergers expected in medical services

Physicians operating private practices in Texas might become increasingly rare in the future. According to the managing director at an investment bank focused on the health care industry, a trend toward more mergers and acquisitions became clear in 2017 and is expected to accelerate in 2018. Usually hospitals and private equity firms buy multiple medical practices and consolidate them into a single entity, but sometimes independent physicians join forces to create a single clinic.

Office-based medical services such as dermatology, ophthalmology, urology, gastroenterology and primary care represented the bulk of transactions in 2017. As far back as 2015, consolidation had become prevalent, with hospitals owning 25 percent of medical practices. In 2016, physician ownership lost its majority position, and now only 47.1 percent of physicians own their own practices.

Financial pressures are fueling the trend. The costs of investing in information technology and operating complex billing systems drive physicians away from sole ownership. Regulatory uncertainty around the health care industry is raising concerns about future burdens and income. A desire to focus on patients instead of business demands also inspires some physicians to choose working within a large organization instead of an independent practice.

Professionals who are considering the sale of their business to another entity could gain a better understanding of the process by consulting an attorney. Mergers and acquisitions require many steps, and an attorney could supply advice when drafting the applicable documents. In some cases, regulatory approval might be required, and an attorney could be of assistance in this regard as well.

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