TeamHealth-IPC Deal Latest in Consolidation Trend
Two deals involving hospitalist management firms were announced in the past week, further consolidating the ranks of staffing companies in the specialty.
In the bigger deal, TeamHealth Holdings, Inc., last week agreed to acquire IPC Healthcare Inc. of North Hollywood, Calif., for $1.6 billion. The deal announcement highlighted IPC’s stake in both hospital and post-acute care settings as a motivational factor for the acquisition.
“Combining emergency department staffing with hospitalist presence creates the opportunity to effectively manage patients from the emergency department through the inpatient discharge and beyond,” the deal announcement notes. “This will allow TeamHealth to lower costs and increase quality, and, as a result, drive better patient experiences.”
TeamHealth’s acquisition of IPC Healthcare is the latest deal to combine large hospital management groups, perpetuating a consolidation trend among companies seeking cost efficiencies.
Also last week, private equity firm Onex Corporation announced an agreement to acquire Hospital Physician Partners (HPP) of Hollywood, Fla., which bills itself as the fourth-largest provider of emergency and hospitalist clinical staffing services. Financial terms were not released.
Both deals are expected to close by year’s end. They follow 2014’s acquisition by Sound Physicians of Cogent Healthcare. The combined entity, which retained the Sound name, created the largest hospital management group in the country.
John Nelson, MD, MHM, a principal in Nelson Flores Hospital Medicine Consultants and regular practice management columnist for The Hospitalist, says consolidation is a double-edged sword.
“They may have the scale to come up with new valuable ways to organize care that can be adopted … by others,” Dr. Nelson writes in an email to The Hospitalist. “But a marketplace that moves from multiple competing companies to a few very large ones faces the usual negatives of fewer competitors in the marketplace.”
Dr. Nelson compares such deals to the airline industry, where consolidation has shrunk the playing field to a handful of major carriers. While larger HM firms may carry more weight in contract negotiations with institutions, individual practitioners need not worry that consolidation as a trend will negatively impact their daily rounds, he notes.
“Any efficiencies large companies have will likely have little effect on the work life of rank-and-file hospitalists, at least for foreseeable future,” he adds. TH
