Alongside the steady stream of hospital consolidations runs another steady flow: hospital acquisitions of physician groups.

Uncertainty around the Patient Protection and Affordable Care Act, increasing regulation and declining reimbursements are nudging physician practices to become employees of hospitals.

For hospitals, the risks of acquiring a physician practice are similar to hospital mergers, but with some unique twists.

Concerns about compliance, false claims and overpayments exist for hospital M&As of physician groups, said Todd Swanson, a principal in the business transactions department of Los Angeles-based law firm Hooper Lundy & Bookman P.C. These risks tend to be more severe for hospitals, which “typically have a greater number of, and more complex, agreements with physicians and other referral sources, each of which should be vetted for legal compliance.”

On the other hand, Doug Mitchell, principal at Phoenix-based consulting firm David Douglass L.L.C., said, “Acquiring physician groups can be a challenge for the risk manager. Remember, the physician practice being acquired is likely in questionable health if it is in the process of entertaining acquisition opportunities. That might indicate record-keeping hasn't been in place, or the folks risk managers are dealing with may be self-employed and have emotional reactions to the questions posed by risk managers.”

Madelyn Quattrone, Plymouth Meeting, Pa.-based senior risk management analyst with the ECRI Institute, said, “Risk managers must assess the insurability of physicians and midlevel providers who would become employees. Self-insured organizations need to develop and implement disciplined underwriting standards for all to-be-acquired physician practices. Underwriting criteria might require physicians to agree to actively participate in the organization's risk management and quality improvement initiatives.”

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Personal involvement is more likely for physician groups being acquired, ratcheting up the potential for culture clash. “It is in the acquisition of physician practices where risk managers will have to use all of their assessment and communication skills to get accurate information,” Mr. Mitchell said.

Malpractice concerns also remain a consideration for physician and outpatient practices being acquired. Dr. Joseph Perz, Atlanta-based epidemiologist and team leader with the Centers for Disease Control and Prevention, described a scenario in which an outpatient clinic reused saline IVs. “Almost 100 patients suffered through hepatitis C as a result,” said Dr. Perz.

Ensuring a facility is using correct, sanitary and safe procedures is critical. Unsafe or high-risk practices could leave the acquiring entity exposed to ongoing risk if the unsafe practices are not discovered and corrected.

Another risk often not considered when acquiring physician practices is resource constraint among risk managers themselves.

“Acquisition of physician practices can occur rapidly,” Ms. Quattrone said. Practices acquired at the same time may range from large, multispecialty groups with hundreds of physicians to solo and small primary care practices that may lack familiarity with even basic risk management principles. Risk management resources are likely to be spread thin.”

One solution? Include risk managers early in the acquisition process.

“Involving risk managers in discussions about practice acquisitions before they occur allows risks to be identified and prioritized so that limited risk management and patient safety resources can be directed effectively,” said Ms. Quattrone.