THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Sunday, July 31, 1994 TAG: 9407300237
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM HOLDEN, STAFF WRITER
LENGTH: Long : 120 lines
Sentara Health System is negotiating with family medicine practices in three Hampton Roads cities in talks aimed at forming the region's largest physician-hospital network.
If successful, the discussions will produce a new division for the Norfolk-based company and add an estimated 60 or more family doctors to its complement.
Company officials declined to name the practices, saying the talks are private. But a spokeswoman confirmed Friday that doctor's practices in Norfolk, Virginia Beach and at least one on the Peninsula are involved.
``Some are a little further along in the discussions than others so it's a little premature to say who we're talking to,'' said Karen V. Corrigan, vice president of Sentara Health System.
``We've had a number of physicians interested in pursuing this,'' she said. ``But at this point none of those discussions have been finalized.''
While no names have been released, representatives of one major Hampton Roads player, NDC Medical Center of Norfolk, were present at a meeting with Sentara officials Thursday evening at the Norfolk Convention Center, where some talks have been held.
NDC, Hampton Roads' largest independent group practice, has long been sought by Sentara as a partner but has resisted efforts to merge.
If the deal is made final, patients would not see any change in their health care, Corrigan said. Physicians would probably stay in their existing offices. What would change is the business relationship that doctor's practices have with hospital systems.
The purpose of such mergers, Corrigan and other health planners said, benefits both the hospital systems and the doctors. For the hospitals, the consolidation helps them create efficient companies with fewer bureaucratic and administrative requirements.
For physicians, joining forces with big health care systems frees them from insurance, regulatory and information-handling requirements that increasingly distract them from caring for their patients.
``We think it will improve the quality of care and decrease the cost of that care,'' Corrigan said.
Sentara is not the only health care company to embark on such ventures. The move is part of a nationwide trend in health care for hospitals and doctors to become more closely aligned.
Virginia Beach-based Tidewater Health Care Inc., parent company of Virginia Beach and Portsmouth general hospitals, has been steadily building its own network of physicians.
After negotiations that began in fall 1992, the Tidewater Medical Group opened for business on Jan. 1, 1994, with 15 primary-care physicians in Virginia Beach - and a standing invitation for other physicians to join.
Today, 23 physicians have accepted - 16 family practitioners, seven internists and four nurse practitioners - and this fall the first pediatric group will join. The company hopes to have 50 physicians under contract within five years.
``It's not something I entered into lightly,'' said Dr. Steven D. Pearman of Princess Anne Family Practice, who has joined the network. ``Physicians are independent by nature. But seeing the way medicine was moving, I wanted to maintain a voice in the care my patients receive.''
The way it was moving, he said, made it increasingly difficult to treat patients and run the office. Multiple insurance forms, federal safety regulations and tougher demands on information handling diverted too much of Pearman's time from patients.
Doctors were also concerned that joining forces with hospital systems would mean possibly losing their offices. That might jeopardize the relationships they had with patients, he said.
``Primary-care doctors want to take care of patients,'' Pearman said. ``That's what I want to do. But it's hard to juggle taking care of business and taking care of patients at the same time.''
While doctors say they're happy to have the burden lifted, the effort has been costly for hospitals.
To bring physicians under its influence, Tidewater Health Care had to entice physicians with contracts that made the switch financially worthwhile. But how much it will cost remains uncertain.
``It's expensive,'' said Douglas L. Johnson, president and chief executive officer of Tidewater Health Care. ``But the board believes that this will have such an impact on health care they they have funded this more than adequately, but I just don't know the final cost of the program.''
To limit start-up costs, the company did not buy real estate - only the tangible equipment that physicians use every day. For most doctors, the equipment cost is fairly small - a scale here, maybe some fairly low-tech laboratory equipment. The most important asset, Johnson said, was what doctors carried in their heads.
While such mergers might represent a loss of independence for traditionally independent physicians, they gain in exchange a great deal of control on how Tidewater Medical Group is run clinically.
``Most doctors define autonomy as being in control of their patients' care, and that's been preserved,'' said Vicky G. Gray, the vice president of administration who has played a key role in negotiations with doctors.
Most contracts will last from five to seven years, she said.
Traditionally, American health care is a patchwork, cottage industry with each profession providing a service for which it earns a fee, said Roice D. Luke, professor in the department of health administration at Virginia Commonwealth University.
``Doctors provide services and they're paid. And hospitals provide services and they're paid. And insurance companies provide coverage and they're paid,'' Luke said. ``That's all very nice, but it's difficult to control costs.''
To create those incentives, hospital managers have turned to hospital-physician groups in an effort to run their companies without lowering the quality of care. The idea, he said, is to transform hospitals into businesses where the incentive is for cost containment.
Whether it will work is unclear.
``Will this lower prices? Yes, we think it will,'' Luke said. ``That's what Sentara and Tidewater Health Care are doing. They're in the early stages of forming a delivery team, but a lot of the pieces are not in place. You have to take some of this on faith. This is an evolving concept.
``But we know this much,'' Luke said. ``It's either do it this way or control costs through pure budget controls like they do in Canada.'' ILLUSTRATION: Graphic
JOHN CASERTA/Staff
HEALTH CARE REFORM ALREADY UNDER WAY
[For complete graphic, please see microfilm]
by CNB