Selling to a Hospital as An Option for Doctors

Case study on selling a practice

Selling to a Hospital as An Option for Doctors

Case Study: The Northside Hospital System, Atlanta

When two large oncology groups in Atlanta were purchased by Northside Hospital out of pocket costs for patients went up. For the most part the care provided remained consistent. Patients went to the same offices and saw the same staff for their blood work and medications. 

Why did the doctors sell their practice?

The physicians said it was a necessary step for survival in today’s health care marketplace.

  1. Cuts to reimbursement – Medicare and other payors have gradually cut reimbursement to independent healthcare providers. Private insurers have followed suit.
  2. Increasing costs – Hiring staff costs more and qualified employees are difficult to find. Medical practices are experiencing increases to their other operating costs including rent, insurance, and supplies.
  3. Management systems – From human resources to technology, small practices face the same challenges as larger organizations and often do not have the resources to keep up.

Why are hospitals acquiring medical practices?

  • Better negotiating position with Medicare and private insurance companies. 
  • Ability to strengthen their referral networks in order to create new revenue streams from their ancillary services.
  • Prevent other healthcare systems from buying these practices.

Why are hospitals charging so much and why do Medicare and private insurance companies pay them more?

Because they are a hospital system, Northside can bill at significantly higher rates for the same services. The argument that is used to support this is that hospitals deliver large amounts care that is never paid for, and their operating costs are higher.

How was the quality of care to patients affected? 

Using colon cancer as an example, Northwest’s Oncology service is rated as “High Performing”. 

A quick scan of reviews for Northwest’s Oncology service were generally positive.

“Something I remember about the hospital is that many of the staff that took care of me were breast cancer survivors – the lab technicians, some nurses, the pain management team, even the lady that brought me my food tray,” Vera said. “I thought that was a wonderful touch that the hospital took. It was so inspiring to have everyone that you came into contact with telling you that they were a survivor and many of them for many years.

– Yelp Review

Pros for providers

  • Financial exit strategy to monetize their years of hard work
  • Less management headaches
  • Salary predictability

Cons for providers

  • More bureaucracy in a hospital environment
  • Salary may be below what each doctor was earning as an owner
  • Possible conflicts on issues like numbers of days off


Over 50% of physician practices are owned by hospitals or corporations. Selling to a hospital can be a good alternative for physicians. It provides an exit strategy and gives them the ability to concentrate more on patient care. Out of pocket costs for patients go up which translates to less access to healthcare for already underserved populations.


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