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June 20, 2019

Family Psychology

I still remember the very first thing Dr. Powell said in my Family Psychology class.  ‘Two people don’t get married…two family histories do.’

Wow, there was so much more truth in that statement than my 20-year-old single self could begin to realize.  The rest of the semester was spent discussing the dynamics and dysfunctions that flow from that single reality. The past 32 years have been a practical homework assignment to help me really understand what that truth means.

This is worth remembering because as physician practices work to develop plans for remaining independent, many will contemplate various strategies that lead to combining with other practices through mergers, acquisitions, management agreements, joint ventures, independent physician organizations (IPAs, but not the beer), accountable care organizations (ACOs), or some other three-letter acronym that stands for getting married.

At least three of our current clients are actively pursing a strategy of ‘acquiring’ other practices in one form or another; other of our clients are being pursued.  So, this is a topic that comes up a lot in my world these days as we help them think thorough their options.

Invariably, the conversation gets around to the family psychology, the reality of trying to unite two different family histories.  These things generally end up looking just as messy, just as weird as real families.  One of our clients had a deal blow up at the last minute because the lead doc in the to-be-acquired practice went to jail.

Yep, humans are humans, both in families and physician practices. The Jerry Springer Show is not running out of potential guests.

It has long been a point that a lack of cultural and values alignment is often the most important reason that mergers and acquisitions fail.  Just because it is valid and has been made repeatedly does not mean many organizations still ignore it, as the high failure rate of all mergers proves.

The issue is even more true when combining physician practices than for most companies in general.  A physician practice, intentionally or not, was built in the image of the founding physicians.  They are not just the owners, but also the product…they are the source of the revenue for the business.  This combination of factors means that whatever the family history of this practice – its values, its operations, its approach to the patient experience, its way of making decisions, its lingo, its everything – it is hard-wired deep into the DNA.  Signing a transaction document and changing the logo on the door are not going to undo that history.

There is a high probability your practice is having, or will have, courtship discussions that have an eye toward either marriage or at least moving in together.  Your future independence likely means you need to entertain or pursue these discussions.  Just keep Dr. Powell’s truism at hand early and often.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.