ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, June 28, 1996 TAG: 9606280042
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
NOTE: Below
VIRGINIA'S LARGEST physician practice has decided to join Phycor Inc., which will give the clinic access to a statewide network of doctors.
Lewis-Gale Clinic, Virginia's largest physician practice, said Thursday it has signed a preliminary agreement to sell its assets to PhyCor Inc., a Nashville, Tenn., physician practice management company.
The Salem-based clinic includes 135 doctors and a total of 1,079 employees. It owns $45 million worth of real estate at its Braeburn Drive site and at 12 satellite clinics. It has not been decided if the real estate will be part of the deal, officials said. The clinic's other holdings, such as equipment and accounts receivable, would be included.
In choosing PhyCor, the clinic rejected overtures from Columbia/HCA Healthcare Corp., a hospital company that owns the Lewis-Gale Medical Center, adjacent to the clinic.
Columbia was among at least four suitors the clinic considered during the past 18 months while it searched for a partner with clout and money. Although financially successful, the clinic also needs influence to remain competitive in an arena where large health care networks are the trend, said President Lyn Brooks.
A 20-physician "study group" interviewed potential purchasers and selected PhyCor because the doctors felt they could retain more control with it than with the hospital system, he said.
Brooks said patients shouldn't be able to tell any difference; the clinic name won't even change.
PhyCor pioneered the physician practice management network. Columbia, although the nation's largest for-profit hospital system, is a newcomer in that area, he noted.
The clinic and Lewis-Gale Medical Center will continue to cooperate and even expand their joint efforts, Brooks said. Clinic doctors already provide services at several rural Columbia hospitals that do not have enough specialists.
"We need to work with Columbia," he said.
A Lewis-Gale Medical Center spokeswoman said it would be "inappropriate" for hospital officials to comment on the clinic's decision.
Joining PhyCor will give the clinic access to a statewide network that includes physician affiliates in Tidewater and Richmond, and to a regional network that includes practices in Kingsport, Tenn., and Charlotte, N.C.
A larger network of doctors makes it possible for Lewis-Gale to compete for managed care contracts with companies that have operations and employees in more than one location, Brooks said.
He declined to attach any dollar amount to the deal.
"PhyCor will try to put a value on it," he said.
The agreement allows four months for details of the deal with PhyCor to be completed. Brooks said he thinks it can be accomplished in half that time. Although either side could decide not to go through with the agreement, Brooks and Lewis-Gale medical director Dr. Bruce Hagadorn indicated they expect the deal to close.
Any final contract will provide for the doctors to remain owners of Lewis-Gale Clinic, Brooks said. The 900 or so support employees would work for PhyCor.
Brooks couldn't say what joining PhyCor might mean for Lewis-Gale employees. But Steve Kilgore, executive director of the Kingsport PhyCor affiliate, said the alliance improved benefits there.
"We didn't see any change in staffing levels," said Kilgore, who had been with the group for 12 years before it became part of PhyCor.
He heads the Holston Medical Group, which joined PhyCor three years ago. It since has grown from 30 physicians to almost 50, he said, and the doctors haven't run into any "surprises" or "negatives."
Before signing with PhyCor, the Holston doctors visited some of its affiliates and asked patients about the company.
"They'd never heard of it," Kilgore said. "In the communities where it's located, PhyCor is pretty much a transparent thing."
If Lewis-Gale Clinic goes through with its plans, few area physicians will remain in independent practices. In recent weeks, Carilion Health System of Roanoke purchased 42 physician practices in central and Southwest Virginia.
Carilion and Columbia are the area's two hospital competitors.
LENGTH: Medium: 83 lines ILLUSTRATION: PHOTO: Lewis-Gale Clinic Inc. color. Graphic: Chart by staff.by CNBcolor. KEYWORDS: MSG