Five strategic paths help GI practice owners navigate rising costs, consolidation

Editor's Note

Independent gastroenterology (GI) practices face mounting pressures from inflation, labor shortages, and regulatory burden, but five distinct strategies offer owners a path forward, Gastroenterology & Endoscopy News May 23 reports.

As detailed in the article, GI practices—especially smaller ones, which make up the majority of the approximately 2,100 US groups—are grappling with a difficult landscape. Rising demand for services like colonoscopies is tempered by recruitment challenges and a costly operating environment. Many groups lack the resources to independently launch high-demand services in ambulatory surgery centers (ASCs), which currently handle about 30% of GI volume.

The article outlines five strategic options for practice owners. The first is maintaining the status quo. While this preserves full autonomy and avoids revenue-sharing with outside entities, the model places heavy administrative burdens on owners—often over 10 hours per week—and limits long-term investment and growth.

The second strategy is partnering with a management services organization (MSO). This offers operational support and access to new services, but often comes at a steep cost, including forfeiting up to 40% ownership in new ventures like ASCs. For practices with solid internal infrastructure, this trade-off may be less appealing.

The third involves merging with another independent physician-owned group. Mergers can increase negotiating power and bring operational efficiencies without surrendering equity to outsiders. However, they come with complex integration challenges, from leadership disputes to technology choices, making governance more politically charged.

The fourth is to pursue external capital, typically from private equity (PE) firms. The article notes that PE investment in GI has expanded rapidly since 2016, covering over 20 states and more than 10 major platforms. This route provides liquidity and resources for growth but reduces business autonomy, requiring careful partner selection to ensure shared vision and trust.

Finally, the fifth strategy involves joining a national physician organization, which offers GI owners access to capital, infrastructure, and reduced operational risk while providing a substantial upfront payment. The trade-off is reduced independence, though clinical decision-making typically remains with the physicians. This model reflects a broader shift away from private practice among new physicians, with PE-backed platforms playing a growing role in shaping the specialty.

Ultimately, the article stresses the best strategic decision depends on the owner’s goals and long-term vision. A trusted financial advisor is critical to navigating this increasingly complex environment.