Jacksonville Business Journal
January 8, 2010
Faced with economic uncertainty and financial woes, doctors in private practice are increasingly turning to hospitals for employment.
The percentage of hospitals employing private practice physicians has nearly doubled since 1994 and the trend is expected to accelerate in 2010 as those doctors seek greater stability and health systems attempt to extend their geographic reach.
St. Vincent’s HealthCare has recently renewed its interest in expanding primary care, typically given by a family doctor. And Baptist Health has been particularly aggressive about expanding its specialty and primary care practices, and said it’s just getting started.
The latest development is a nonbinding letter of intent between Baptist and Jacksonville Orthopaedic Institute that could lead to the health system taking ownership of the 32-physician medical group. Both sides are evaluating the deal, which stands to impact St. Vincent’s HealthCare and HCA Inc.’s two hospitals, Memorial Hospital and Orange Park Medical Center, where Jacksonville Orthopaedic physicians also practice.
“The continued aggressive expansion of primary care is a top priority,” said Hugh Greene, CEO of Baptist Health. “We began a plan last year to add 50 percent more primary care in the next five years. We opened up three new primary care offices in the past four weeks, so that is a huge focus for us.”
Doctors are beginning to warm up to the idea of aligning with hospitals, which has long been considered off limits by private practice physicians. But groups such as Lyerly Neurosurgery, which joined Baptist in 2006, are finding it increasingly difficult to practice on their own. Joining a health system looked more appealing as a safe haven.
“When it happened, people around the country and state initially said, ‘Are you crazy? You joined forces with the hospital,’ ” said Dr. Javier Garcia-Bengochea, president of Lyerly Neurosurgery. “Physicians, insurance companies and doctors joined this unholy triangle and we viewed each other as competition. The reality was that at least hospitals and doctors shared many common interests, and in fact, our interests were aligned in most cases. So we decided we’d try to leverage that.”
So will others, according to PricewaterhouseCoopers. It pegged the migration of physician groups to health systems as one of the major health care trends in 2010, particularly as funding models move toward bundled payments or global fee structures. It will require all providers to re-evaluate their relationships, operational infrastructure, payer contracting and overall funding models.
“Consolidation is generally beneficial for physicians in negotiations with health plans over reimbursement rates,” said Josh Kelly, a market overview analyst at Nashville-based HealthLeaders Interstudy. “It puts them in a stronger position with health plans.”
In addition to strengthened relationships with health plans, it alleviates significant financial woes tied to malpractice insurance, implementation of electronic media and other administrative and operational costs.
“When a practice goes over to the hospital, it tends to mean they are looking for security,” Kelly said. “There’s much less of a headache.”
There is also significant benefit to the hospital; it can reap referrals from primary care doctors, who aren’t required to steer patients toward an affiliated hospital over another hospital, but often do.
Hospital executives said the primary goal is to increase access to care in underserved and growing areas such as areas to the north and south of Jacksonville. St. Vincent’s HealthCare, which plans to double its primary care network within five years, has its sights set on Clay County.
“We do have plans to continue to grow the network and make sure the community has adequate access,” said David Meyer, vice president of strategic planing and marketing for St. Vincent’s HealthCare. “There is a pretty big shortage of primary care, so we are poised to expand our network, certainly over the next 12 months, but really the next 36 to 48 months.”
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Jacksonville Business Journal