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Accountants predicting even more physician hookups: Katz Sapper, Heaton and Eadie join forces to keep up with fast-changing health care, benefits landscape

July 21, 2008

Everybody's doing it. So Heaton and Eadie and Katz, Sapper & Miller decided to get together, too.

Katz Sapper announced last week that it will acquire Heaton and Eadie because both Indianapolis-based accounting firms expect their main health care clients-physicians-to link up more and more with one another and with hospitals in the next five years.

They want the heft and experience to win the right to handle finance and consulting on more of those transactions.

Katz Sapper gets Heaton and Eadie's 35 employees, many of whom specialize in third-party-benefits administration, boosting the number of Katz health care and benefits professionals to 35.

Heaton Director Mike Heaton will become a Katz Sapper partner and codirector of the firm's health care services group, with Katz partner David Charles.

"We're going to continue to see consolidation within the physician marketplace," Charles said in an interview. "We've already seen a fair amount of that in the marketplace over the last five to ten years."

But the pressures forcing physicians to build larger practices aren't going away. Rates of reimbursement have been flat at best. Costs have surged. And doctors soon will face prodding or outright demands from Medicare and health insurers to adopt expensive electronic record systems.

In addition, Indianapolis' fiercely competitive hospitals are eager to partner with physicians in various ways. Some have done joint ventures with physicians, such as Clarian Health's solicitation of physicians as investors for its suburban hospitals in Avon, Carmel and Fishers.

Other hospital systems, such as Community Health Network, have hired physicians as employees and are looking to hire more. That's because they want a steady stream of referrals and federal laws do not restrict referrals made within the same business entity.

"We just see the hospitals are being very active in their joint venture relationships with physicians. Certainly, the hospitals are being more active in employment of physicians," Charles said. "We just see over the next two to five years there's going to be a big demand for those [transaction-related] services."

The merger of Heaton and Eadie with Katz should help handle those deals, Heaton said, because each deal is highly idiosyncratic.

"If you've seen one of these transactions, you've seen one," he said. "They're all different; they're all unique."
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