From the Department of Foreseen Unforeseen Consequences

I’m receiving rumors of well-established California medical practices closing quite suddenly as of the end of last year, a consequence of ObamaCare and California’s increasing taxes. Can anyone confirm that?

7 comments… add one

  • steve

    No. Asked buddy who trained in CA and maintains good contacts. The current trend is mergers and PE groups buying up practices.

    Steve

  • That would be a relief. Perhaps what I’ve heard is idiosyncratic.

  • Drew

    To steve’s point, firms like Chicago’s own GTCR, who have a history of rolling up professional services firms, are buying medical practices and physical rehab practices etc. (Golder Thoma just sold Bolingbrook based ATI to KRG.)

    The traditional pro services roll up value proposition is to bring best practices, provide working capital and consolidate admin overhead. Because of my recent surgery (and a pre-op complication) and now the post-op physical therapy I’ve had a chance to speak with a number of doctors. They are not happy. The hammer is coming and they know it; many are selling their private practices because the oversight is really bugging them and the admin plus cost reduction is burdensome. Its not flat out quitting practice, but the consolidation is starting in earnest.

    I don’t have a clue what’s going on in California, but its hard to imagine the economic pressures there are not even more intense.

  • jan

    Anthem Blue Cross, California’s largest for-profit health insurance company, is seeking to raise it’s premiums 18% on some 630.000 customers. For others, insured with this company, it could go as high as a 25% increase. Obamacare, touted as a cost-saving measure, in reality is not lowering the cost of healthcare — it is merely complicating it (for now), and, IMO, will compromise it in the future.

    As has been said, by more pragmatic medical minds, just because you have a health card in your hand does not mean there will be enough adequate/qualified services in which to use it. I think rural communities will be hit the hardest by the ACA, as they are the least prepared to handle the untoward side effects of this malformed healthcare creation.

  • No. Asked buddy who trained in CA and maintains good contacts. The current trend is mergers and PE groups buying up practices.

    Does this really disprove the claim? Could the mergers result in closures of some practices, bought up in said mergers, and then deemed to be cost-inefficient due to Obamacare and increasing taxes?

  • Drew

    Steve V

    “Could the mergers result in closures of some practices, bought up in said mergers, and then deemed to be cost-inefficient due to Obamacare and increasing taxes?”

    The 2013 version of Drew was trying to be more diplomatic. Industries consolidate under competitive/cost pressure. Almost every med pro I know is completely demoralized right now about the cost crush and admin burden occuring. Hence, they throw in the towel and become part of big business.

    I’m one lucky SOB. I have med friends who tell me how to navigate the system and find great med practitioners. I pity the Average Joe fools who must find their own way………..and with ObamaCare it will only get worse and worse.

  • steve

    ““Could the mergers result in closures of some practices, bought up in said mergers, and then deemed to be cost-inefficient due to Obamacare and increasing taxes?””

    It has been more of a quest for market power. “Go big” has been the mantra for quite a while now. I have had multiple merger offers over the last 10 years. The thinking is that a big enough group can negotiate better fees with the insurance companies or have more clout with hospitals. At least here on the East coast the mergers aren’t really resulting in lots of people losing jobs, just lots of moving around. The PE firms area bit different and have different models.

    Steve

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