Consolidation is on the rise in healthcare, leading to questions about what the future of physician-owned practices might look like.
One factor that can play into physician practices being bought out by larger chains or private equity is the headache of communicating with payers, managing taxes and payroll, and upkeep of compliance and regulatory responsibilities.
But employee stock ownership plans may be one way for physicians to maintain independence while eliminating administrative headaches, saidAdam Brown, MD, in a July 5 opinion published in Medpage Today.
Employee stock-ownership plans typically refer to retirement plans that give employees an ownership interest in a company. A practice-funded trust is created that acquires shares on behalf of employees, and they earn shares through their work at the practice. This structure “aligns the interests of the employees with the success of the practice, fostering a culture of ownership and accountability,” writes Dr. Brown.
Because ESOPs are managed by independent trustees, the plan ensures that the long-term performance of the practice and the employees are placed ahead of short-term financial gains.
The benefits of ESOPS also include greater ability to provide personalized care for community members, tax benefits and gradual transfer of company ownership to the next generation of physicians. Dr. Brown said that adopting this model requires careful planning, legal counsel and a high level of commitment from employees, but could ultimately serve as a strong alternative to corporate buyouts.