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VOL. 128 | NO. 11 | Wednesday, January 16, 2013

Health Care Alignment Trend Accelerates

By MICHAEL WADDELL

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The trend for alignment between hospital systems and private physicians hit the Mid-South in mid-2010 and has gained momentum since.

The area’s three major hospital systems – Baptist Memorial Health Care, Methodist Le Bonheur Healthcare and Saint Francis Healthcare – are padding their physician rosters with primary care doctors and specialists by acquiring practices in strategic locations throughout the Memphis market.

“This is the future of medicine. The future of independent medical practice is declining and will eventually be a rarity,” said Dr. Michael Lachina, chief medical officer for Saint Francis Healthcare and the CEO of Saint Francis Medical Partners, the hospital’s employed physician network.

Lachina pointed out that in Cincinnati already more than 80 percent of physicians work for hospitals and in Cleveland that number is 95 percent.

“In some markets, independent practice is becoming extinct,” he said. “Will it reverse and doctors go back to their private practices? I don’t think so. I don’t think most doctors will have a choice because of financial and reimbursement issues.”

In Memphis, so far only about 20 percent to 30 percent of private practices have aligned compared to an overall national rate of 65 percent.

Reasons that physicians might choose to affiliate with a hospital system include worries about accountable care and how reimbursement issues could affect their income, and struggling practices could look for a hospital partner to help right their ship.

Compensation changes for cardiologists prompted the start of the trend, and in 2010 Methodist acquired the Sutherland Group and Baptist bought the Stern Group.

In the past two years Saint Francis has accelerated its primary care growth strategy, which calls for 75 percent to 80 percent primary care physicians and 20 percent to 25 percent specialists.

“The fact that physicians were beginning to sell their practices and join hospital systems caused us all to increase the speed that we were affiliating,” Lachina said.

Saint Francis now has 42 local employed or affiliated physicians in its network, and Lachina envisions growing that number to around 80 in the next few years.

“We essentially are building a multi-specialty practice without walls, with a heavy emphasis on primary care,” Lachina said. “I think 80 is a good competitive number to establish some prominence and competitive advantage in town. A group with an 80/20 primary care specialty will be quite competitive as far as bargaining power with insurance companies as well as the ability to form an accountable care organization.”

In 2012, Saint Francis aligned with 12 new doctors, and Lachina thinks that number could double this year. The most recent addition for the hospital was the office of Dr. Forrest Ward, internal medicine specialist, and Dr. Charlotte Jackson, primary care physician, in Bartlett late last year.

“We have another eight physicians that we are in the process of signing onboard, so by the summer we will be up to about 50,” Lachina said.

Methodist has focused on acquiring the practices of cardiologists, cardiovascular surgeons and primary care physicians, and its roster now includes an estimated 70 specialists and 45 primary care providers in the Memphis area. Bill Breen, Methodist senior vice president of physician alignment, expects to grow to 70 primary care providers in the next 12 to 18 months.

“In certain specialties, alignment is more likely to occur than in others due to environmental factors like the cost of doing business and reimbursement from the federal and state governments,” Breen said. “The regulators and the payers really would like to see greater integration because they think that translates into greater accountability and greater ability to control costs and improve quality.”

Breen expects the alignment trend to continue, especially in certain specialties like primary care.

“Our most fervent activity is on the primary care side,” Breen said. “On Jan. 1 we aligned with Motley Internal Medicine, and we have another 10 physicians in the pipeline.”

Baptist Medical Group, Baptist Memorial Health Care’s multispecialty physician group, recently added four new physician practices to start the new year: The Medical Group, GI Specialists, Metro Cardiovascular & Thoracic Surgery and Collierville Family Medical Center.

Baptist’s total number of physicians is now more than 400, representing 31 specialties in West Tennessee, East Arkansas and North Mississippi. For fiscal year 2012 (from October 2011 to October 2012), BMG added 96 physicians, and since BMG formed in February 2010 the BMG physician roster has grown from 76 to 408 health care providers.

“For Baptist Medical Group it is not really about numbers,” said Robert Vest, Baptist director of acquisitions and development.

“It is about finding the right partnerships with the right physicians.”

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