Hospital systems forcing doctors to choose sides

In health care these days, monogamy rules.

The five-year trend of physician practices marrying up with hospitals has made it harder and harder for independent physician practices to spend time in more than one hospital system.

The latest case in point: After a 50-year relationship, Indiana University Health’s Methodist Hospital broke up last month with OrthoIndy, the group of orthopedic surgeons that had staffed the downtown hospital’s trauma center.

Jane Keller is CEO of OrthoIndy and its Indiana Orthopaedic Hospital.

The move by IU Health came roughly three years after OrthoIndy sold a $40 million minority stake in its Indiana Orthopaedic Hospital to St. Vincent Health, a fierce rival of IU Health.

Also three years ago, St. Vincent began developing its own trauma center at its flagship hospital on West 86th Street, with OrthoIndy playing a key role in providing the orthopedic surgery there.

IU Health has now recruited its own team of orthopedic trauma surgeons. And it plans to do more of the same in other parts of its orthopedic business.

OrthoIndy still provides orthopedic services at multiple hospitals, but even its leaders acknowledge that they have seen patient referrals decline as each hospital system has encouraged the physicians it now employs or controls to keep patients within its hospital and physician network—and not to refer patients to independent practices outside of it.

“It has gotten increasingly difficult and, depending on what happens with ACOs and changes with health care, it could be even more difficult,” said Jane Keller, CEO of OrthoIndy.

ACO stands for accountable care organizations, which are partnerships formed by doctors and hospitals that agree to be paid based in part on how well they keep patients healthy. Many hospitals have acquired physician practices in the name of forming ACOs.

OrthoIndy is one of a handful of large physician practices that continue dancing with more than one hospital partner. Others include Urology of Indiana, Goodman Campbell Brain and Spine, and American Health Network.

Goodman Campbell’s neurosurgeons work in all four of the major hospital systems in Indianapolis—IU Health, St. Vincent, Community Health Network and Franciscan St. Francis Health—as well as many others in surrounding counties.

But Community Health has been hiring more neurosurgeons of its own—including paying $1.2 million in compensation to lure surgeon David C. Hall away from Goodman Campbell itself.

And IU Health and St. Vincent have been competing fiercely for Goodman Campbell’s attention. A major factor behind IU Health’s decision to build its $120 million neurosciences center, which opened in August, was to woo Goodman Campbell physicians.

Virkus

Yet Dr. Troy Payner, president of Goodman Campbell, was recently named the clinical chief of neuroscience for St. Vincent Indianapolis Hospital.

Payner did not return a phone call seeking comment for this story.

“Hospitals are forming systems because they want the patients,” said Dr. Walter Virkus, the newly hired director of orthopedic trauma services at IU Health. “If you’re partnering with two systems, obviously, you can’t take the patient to two places.”

Virkus was recruited to IU Health from the Rush University medical center in Chicago. He said the chance to build an entirely new team of surgeons is unheard of in health care—an opportunity too exciting to pass up.

IU Health now has a team of seven orthopedic trauma surgeons at Methodist Hospital and will likely hire one more. Two of those surgeons are working part time at Methodist in addition to their full-time work at Wishard Health Services, which also operates a trauma center downtown.

IU Health has hired 12 orthopedic surgeons in the past 18 months and plans to hire more, said Lisa Brandt, system vice president for orthopedics and sports medicine.

It’s possible that strategy could affect the work OrthoIndy surgeons continue to do at IU Health North Hospital in Carmel.

“We will build our own in every subspecialty of orthopedics,” Brandt said, although she added that IU Health remains committed to working with physician groups that remain independent but agree to work closely with its employed physicians and the protocols they develop for patient care.

Asked if OrthoIndy’s sale of equity in its hospital to St. Vincent and St. Vincent’s competing trauma center caused IU Health’s decision to oust OrthoIndy from Methodist, Brandt said all three decisions were caused by the changes wrought by the federal health reform law passed in 2010.

“Health care reform is causing significant industry consolidation while also causing health care providers to recognize the need to offer comprehensive programs and services in order to compete. These market forces impact different organizations in different ways,” she wrote.

Keller, CEO of OrthoIndy and its hospital, said she thinks her group’s partnership with St. Vincent did play a role in IU Health’s decision.

“Yes,” she said when asked if she thought OrthoIndy would still be working at Methodist if not for its St. Vincent partnership. “They just had a different strategic plan.”

One physician group that continues to serve multiple hospital systems successfully is Urology of Indiana LLC, which includes 35 physicians and 190 employees.

Dr. Peter Knapp, president of Urology of Indiana, said the key to his group’s success is that it built up strengths in information technology even before the hospital systems started emphasizing them.

So when reimbursement rates for specialist physicians started falling five years ago—at the same time an expensive transition to electronic medical records began in earnest—Urology of Indiana was not forced to sell out to a hospital, as most local physician practices were.

Urology of Indiana has used its own IT team to build custom software interfaces between its own electronic medical records and those of all the hospitals it works with, so its physicians can more easily integrate with those hospitals’ clinical programs.

“Our strategy is to be the best partner for that referring physician and for his referring network,” Knapp said. “If that referring partner is a hospital, then we want to work with them.”

Urology of Indiana works with all four major hospital systems in Indianapolis, as well as with eight others in surrounding counties.

Greg Pemberton, a health care attorney at Ice Miller LLC in Indianapolis, agreed that it has become more difficult for physicians—especially specialists who rely on referrals—to work with more than one hospital system.

But he said other elements of health care reform are pushing the federal government, employers and private health insurers to consider new kinds of contracts that actually could favor independent physician groups.

Groups that can show with data, for example, that they achieve better outcomes for a lower cost in certain areas—such as orthopedics or diabetes—will increasingly be able to form contracts that funnel patients to them, Pemberton said.

“If a group—be it a physician group or an institution—if they can identify consistently better outcomes or an enhanced quality of life in a specific population, they’re going to win the race,” he said.

And that is exactly the strategy OrthoIndy now is trying to pursue. Its doctors believe they have built up evidence to show that they achieve better outcomes at lower cost and have the highest patient satisfaction scores to boot.

Now OrthoIndy is talking to employers about forming direct contracts to provide those services to their workers and to Worker’s Compensation insurers to handle their cases.

OrthoIndy also has opened three walk-in clinics, in an attempt to get patients directly.

“If primary care is all being encouraged to refer to their partner physicians or their partner specialists, then we’ve had to look at how we get patients in our doors,” Keller said.•