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Buyers of physician practices becoming smarter shoppers

With the big physician practice management companies retrenching from stock crashes, and as hospitals nurse debts from unprofitable physician practice acquisitions, the volume of practice sales is slowing. But PPMs and hospitals that are still buying practices are learning from past mistakes. According to the Center for Healthcare Industry Performance Studies, buyers are now more selective in their acquisitions and drive tougher deals on physician compensation structures. "Hospitals in particular have gotten smarter," writes William O. Cleverly, Ph.D. in the 1998-99 Physician Practice Acquisition Resource Book. "They run numbers first and don't buy every practice that is for sale." The result is that despite financial problems associated with those earlier acquisitions, practice prices, on a per-physician basis, are far greater today than they were a few years ago.

SOURCE: CENTER FOR HEALTHCARE INDUSTRY PERFORMANCE STUDIES, COLUMBUS, OHIO, 1999

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