ADVISORY e-ALERT     April 27, 2010
Advisory Law Group, a Professional Corporation
It goes without (much) argument that medical group mergers or acquisitions can be good or bad things, depending on perspective.  For example, your view might be different depending on whether you're a member of the group that's acquiring or of the group that's being acquired.
In this article, we're going to take the perspective of the surviving entity, in other words, of the "acquirer."
Additionally, for purposes of this article, we'll use the term "merger" to mean any take over of control of another medical group, whether a true corporate merger into one surviving entity, the outright acquisition of one entity's assets including its contracts to provide services at facilities, and even the forced, by hospital administration, change in leadership by way of awarding of the next exclusive contract to another group which absorbs many, or all, of the existing group's members.  In other words, it means any possible combination of worker and leadership relations.
Mergers are always problematic, not just from the legal and business issues of the merger itself, but particularly from the cultural aspects of the acquirer and the acquired.  It's from that perspective that this article speaks.
Just as a pilot uses a checklist to make certain that the right procedure is followed prior to taking off, your pre-merger check list must include an assessment of the match, or disjointedness, of group cultures.
I'm speaking of culture from a strategic perspective - the extent of the group's ability develop the strategies and deploy the tactics, by way of a fully integrated effort, to achieve a transformational future.
As you may already know from my blog posts (see this, for example) or from the 2010 Anesthesia Business Update book, equally applicable to any medical specialty (downloadable here), I have a particular way of describing the hierarchy of strategic culture from the most from the most reactive to the most strategic.  I call this ranking The Four Circles™.

The Four Circles
The Four Circles - See
Again, for a complete description of each strategic stage, read the Update's chapter Anesthesia Group Culture:  The Success Perspective.
The acquiring group must assess the strategic culture of the target group as a part of its due diligence prior to the acquisition.  The purpose of that exercise, in very large part, is to determine the compatibility of the target as a merger partner.  There is a tremendous probability that there will be problems integrating a group at a different strategic level into your group, particularly when there is a gap of more than one level between the two, even more so when the target is at a much lower level of culture.
For example, merging a group at the lowest level, the Reactive Group™ level, into your highly developed Strategic Group™, presents a significant challenge.  The members of the Reactive Group™ are out for themselves and barely tolerate their existing group structure, which they see as imposed on them; merging those members into your Strategic Group™, in which all of the members have subsumed their individual interests to the group's in the understanding that only by doing so will they be positioned to thrive past obstacles in business, practice, regulation and the economy, will, at the very least, require Herculean efforts.
Once you are past the evaluation stage and have committed to the merger, you need to remember that educating the members of the target group must take place in the target's world, not in yours.  What are the target group members' interests, prejudices, desires, etc., and how will the merger meet their long term objectives?  Of course, not all of their objectives can be met, but the arguments made must be made in terms that they feel comfortable with or the effort will be doomed to failure.
In connection with the merger of a hospital-based group, the acquirer must prepare, prior to commitment, both hospital administration and the referring physician base - perhaps the entire medical staff leadership.
Even in cases in which the acquirer is "brought in" from outside by a hospital administrator to bring structure to an existing group, the administrator must be made aware of the potential issues, and the temporary disruptions they may cause, as a result.  The adminstrator must also be "drafted" into the proactive and reactive resolution of those issues.  Only be doing so can the acquirer be in the position to obtain the assistance of the administration in smoothing over, or at a minimum obtaining a "pass" from the impact of, potential problems.
The necessity of working closely with referring physicians and medical staff leadership is obvious once you see that they are the primary battleground on which disgruntled members of the subsumed group will launch a counterattack.  If those other physicians, especially referring physicians, are going to support the dissidents, the merger may unravel, from a practical if not also legal sense, extremely quickly.
Depending on the location of the group and, for hospital based groups, the facility, and the nature of their respective relationships with the community at large, the acquiring group may have to engage in preemptive public relations activities to forestall potential dissidents from using public pressure to disrupt the merger.
Just as is the case with acculturating the members of the target, your work as an acquirer with the administration, referring and medical staff physicians, and the community at large, must be conducted with full awareness of, and reference to, the issues and interests of those respective audiences:  In other words, why the merger is important to you is of no importance to them.  Why the merger meets their interests is the only thing they are concerned with.
You should also note, if it's not already obvious, that those opposing a merger can use similar means, in reverse, to derail it -- that is, if they are developed suffienctly from a strategic point of view.
This, of course, is not even an exhaustive summary, let alone an entire roadmap, of addressing the cultural issues of a group merger.  There are, for example, issues with integration of leadership, integration of service providers, integration of business and administrative functions, and scores of tactical and practical issues to be dealt with.  No matter, though, getting the cultural mix wrong from the start will complicate or even exterminate the chances of a successful integration of the target.   


Politician Challenges Exclusive Contract and Stipend Support: Impact on Pain Practice, published in the March 2010 issue of Pain Medicine News.
The Profit Center: Part 13 -- Radiology as factory work?, published on on April 13, 2010.
Keck School of Medicine - May 7, 2010.  Managed Care and Exclusive Contracts.
For information on having Mark Weiss address your group, contact


Want to read past issues?
Did you delete (by mistake, of course!) a past issue of Advisory e-Alert and want another copy?
No matter the reason why, back issues of Advisory e-Alert are available from the archive.  Click here.
ADVISORY LAW GROUP, a Professional Corporation
Tel:  800-488-8014 or 310-843-2800
Fax:  877-883-0099
10940 Wilshire Blvd, 16th FL
Los Angeles, CA  90024
1227 De La Vina St
Santa Barbara, CA  93101

Visit Us On The Web
The materials presented in this Advisory e-Alert are educational only and are neither legal advice nor a substitute for it. Advisory e-Alert presents a general discussion which may or may not apply to your particular legal or factual circumstances. The distribution of Advisory e-Alert is not intended to create, nor does it create, an attorney-client relationship. Please do not send us confidential information without receiving explicit authorization from Advisory Law Group to do so. Do not take or avoid taking any action as a result of the materials presented in this e-Alert without first obtaining legal counsel.   
Let Us Know What Business/Legal Issues You'd Like to See Addressed in A Future Issue
Warning Sign
In This Issue
How To Manage The Impact of Growth
Videocast: Assessing Risk To Your Group
Recently Published Articles
Upcoming Speeches and Presentations
The e-Alert Archive
Free Teleseminar
The Immediate Leader Experience
Mentor Program
The Wisdom. Applied. Blog
MAY 21, 2010
4:00 - 4:30 P.M. PDT


From a business perspective, 95% of hospital-based physician groups are mired in mediocrity:  Their workload is increasing yet their reimbursement is decreasing.  They don't focus on their future, other than, in a minority of instances, to be worried about protecting what they have. 
The top 1% of groups, Strategic Groups™ are free from those complexities -- they exist at another level, constantly developing their own best future.
Learn how The Strategic Group Process™ can help you transform your group into the top 1%. 
Date:  May 21, 2010. 
Time:  4:00 p.m. PDT Approximately 30 minutes in length.
The deadline for registration is May 18, 2010.
Contact for registration information.

You're a physician who wants to form a medical group and, among other things, subcontract with or employ other physicians, enter into exclusive contacts, obtain significant stipend support money, create related entities to increase protection and the like. And you want to come up to speed on all of this immediately.

Or, you're the new leader of an existing group with complex practice and business operations -- you need to understand how to master the group's organizational, operational and leadership issues -- and you need to be brought up to speed immediately.
After having regularly dealt for many years with physicians in both of these contexts, we've designed a process to deliver immediate results: The Immediate Leader Experience™.
The Immediate Leader Experience™ takes place over a weekend in Santa Barbara, California and includes two nights accommodation at the Four Seasons Santa Barbara Biltmore Hotel. 
In two short days, you'll be entirely up to speed, totally prepared and confident.  You'll be armed with tools and sample documents.
Due to the nature of this program, admission is upon interview only -- there is extremely limited availability.
For further information on The Immediate Leader Experience™ follow this link.  
For information on Mark's mentor program, click on the following link:  The Advisor Program.
Follow this link to Mark's blog, Wisdom. Applied.
Join Our Mailing List