Los Angeles-based Prospect Medical Group aims to acquire three independent physician practices in Southern California, the organization announced Monday.
Prospect Medical Group, which is owned by Prospect Medical Holdings, plans to buy certain assets of CalCare IPA, Los Angeles Medical Center IPA and Vantage Medical Group. The transaction, which would double Prospect's network to more than 20,000 doctors, is expected to close this summer.
Prospect's payment models including capitation and shared savings are well positioned to weather unstable healthcare environments like the one COVID-19 has wrought, the company told Modern Healthcare via email.
"Although discussions on this acquisition started more than six months ago, prior to the pandemic, consolidations such as this make a lot of sense in a COVID-19 environment," Prospect executives wrote. "IPAs that compensate physicians in a value-based model such as capitation benefit providers by offering stable cash flow, member management and IPA support at a time when low patient volume, challenges in billing offices and unconventional patient encounters (telemedicine, for example) create difficulties with collections."
Large organizations like Prospect can diversify the provider network into commercial, Medicaid and Medicare lines of business, which offers some stability as millions switch from employer-sponsored commercial payers to Medicaid, executives added.
The three physician groups have contracts with six payers that manage around 130,000 members, most of whom are managed Medicaid/Medi-Cal beneficiaries. Private equity-backed Prospect currently owns or manages 25 independent physician groups across six states with 500,000 members.
Many physician groups are struggling since much of their business relied on non-urgent procedures, most of which had been delayed since March. Those that did not have the infrastructure to switch to virtual care were particularly vulnerable, some of which are weighing closures or consolidation, experts said.