ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, October 4, 1996 TAG: 9610040028
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
Lewis-Gale Clinic's board and the corporation that owns the Salem medical group's real estate have unanimously endorsed selling the operation to PhyCor Inc., a Nashville physician management company.
Lewis-Gale Clinic Inc., founded by doctors in 1909, is the state's largest independent physician group.
All that remains before it joins the PhyCor network of 40 clinics, however, is for its 145 stockholders to give their approval, clinic president Dr. Luthur Beazley III said Thursday. They are to receive the sale prospectus this weekend and vote by the end of the month, he said.
Under the agreement, Lewis-Gale Clinic will sell its assets to PhyCor and then sign a 40-year management service contract with the company. The $45 million worth of real estate at the clinic's Braeburn Drive headquarters and at 12 satellite sites will be bought by a real estate investment trust, which the officials declined to identify.
They said the almost 1,100 clinic workers, who will become PhyCor employees, have been assured jobs and comparable benefits, including a profit-sharing plan.
A policy board will be established with three doctors and three regional PhyCor representatives as members, Beazley said.
Beazley said he expects the doctors to approve the deal with few dissenters. "We've heard some talk from doctors about not wanting to stay in the relationship, but we won't know until the vote," said Lyn Brooks, the clinic's chief executive officer. Brooks would become a PhyCor employee pending a final sale.
The clinic's patients shouldn't see any change, and the PhyCor name won't be displayed at its buildings. But joining PhyCor puts the clinic in a better position to compete with physician groups owned by Carilion Health System Inc. of Roanoke, Beazley said. The sale already has prompted discussions between Lewis-Gale and individual physicians in the area, he said.
PhyCor was attractive to Lewis-Gale because it has expertise in negotiating managed-care contracts and in physician practice management and recruitment, he said.
PhyCor's clinics include 2,430 physicians. It also manages a network of 15 independent practices representing 8,000 physicians. It was started in the late 1980s and became a public shareholder company in 1992.
"We had parallel goals with PhyCor," Beazley said.
One of the mutual goals is to add physicians to the group, he said.
Beazley and Brooks said they have waged an education campaign with the 127 physicians and 18 psychologists who are the clinic's shareholders to reassure them that the PhyCor deal is the right one.
"We didn't want it to just pass. We want it endorsed," Beazley said. "This deal will make it possible for us to move forward. This deal isn't just to keep us above water."
Beazley and Brooks said they are eager to close the deal so they can move ahead with some joint ventures they plan with Lewis-Gale Hospital. They didn't give specifics of those ventures.
Lewis-Gale Clinic and the hospital, which is owned by Columbia/HCA Healthcare Corp. of Nashville, are in adjoining buildings, but they have had a tradition of butting heads, Beazley said.
"The thing that keeps us together is we need each other; we're 90 percent of their medical staff," he said. "We have the big physician piece, and Columbia is potent."
Columbia was one of several potential purchasers of the clinic.
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