Report: The Emergence of Clinical Supergroups

Physicians, dentists and vision-care specialists are teaming up to form supergroups as they strive to meet the growing demands for greater value, innovation, and technology while attempting to maintain independence. Law Firm Polsinelli released a white paper addressing the development and examining the movement.

Historically, small-group or solo practices have been the norm for physicians, but the report indicates that such traditional clinician practice models are often unable to capitalize on changing payment systems, so consolidation within a supergroup can provide relief from various pressures such as decreasing fee for service  compensation. Other challenges include increasing financial demands on growing practices, advances in innovations and technology, as well as shifts in physician objectives and motivations. Co-author of the report, Bruce Johnson believes that the continued development of supergroups will “be profound in its disruptive impacts on consumers, payors, practitioners and investors alike, and across the American healthcare system overall.”

While many physicians have felt compelled to build employed relationships with hospitals and other health care systems as a solution to these problems, entering such relationships can limit practitioner autonomy. Polsinelli’s report claims that supergroups provide the benefits of consolidation while maintaining a level of independence. As opposed to the more traditional clinical practices, supergroups are poised to succeed in the current environment thanks to the use of electronic health record systems, advancing technology, as well as claim, cost and quality data analysis. The consolidation of multiple practitioners decreases costs and promotes efficiency throughout patient services. Providing a combination of multiple services caters to the high demand for consumer convenience, allowing for all of a patient’s needs to be addressed in one visit.

The white paper states that one obstacle for many small-group or solo practice clinicians is the necessity of accessing capital. The report states, “Successful operation of a clinical practice is neither easy nor cheap, and costs and capital demands increase when the practice seeks to grow or access technology and other infrastructure. Many clinicians are unable or unwilling to accomplish this with their own funds.”

Under unified branding, supergroups create a recognizable and trusted name which allows them to more easily seek and attract investment, largely from private equity funds focused on investments in such collaborative healthcare systems. Larger operating systems within supergroups also allow for a more global assumption of risk. Johnson emphasizes the value of this advantage stating, “Now, with these supergroup model practice organizations emerging, we anticipate that increasingly sophisticated supergroup structures that are owned, organized, operated and supported by private equity and other third parties will play an increasingly important role in the health care delivery ecosystem.”

Read the full report here.