Friday, November 5, 2010

Buying medical practices

Today's Post-Standard carries a story about St. Joseph's Hospital buying a primary care practice. This comes on the heels of a story in September about Crouse Hospital's practice acquisition.

So the question is: "Will Community General Hospital be buying practices too?"

The issue is not practice acquisition per se. The issue is developing alignment strategies to help hospitals and doctors work more effectively in the future.

Many changes are expected in health care, and Community's strategy is to seek a merger partner - Upstate University Hospital - to help meet those changes.

▪ New York hospitals, with physical plants that are among the oldest in the country, need to make investments as they replace aging infrastructures, purchase medical technology, and develop electronic medical records. To be economical, such investments need to be spread over a large base of operations. Preparing for the future is largely a question of having sufficient scale to undertake such investments. This means being larger than a stand-alone hospital.

▪ Hospitals in New York generally have weaker financial operations than most of the country. And Medicare payments will be reduced dramatically in the coming years so hospitals have to become more efficient. Syracuse hospitals are already among the most efficient statewide so, again, hospitals face issues of scale, of spreading their fixed costs over operations that are sufficiently large.

▪ Hospitals and doctors will need to better coordinate care, not just hospital care but wellness care and prevention, access to primary care and specialty doctors, and transitions among outpatient, hospital, and post-hospital services – in other words, we will need more integrated delivery systems.

Through Community's merger planning, we expect to enhance the ability of private practitioners to care for patients. But we realize not all physicians will remain in private practice in the future, nor will all doctors coming from residency training want to join private practices. Our affiliation with Upstate will bring Community more options for doctors.

Employing many physicians is a huge task, a huge investment, and a huge risk for a stand-alone hospital. Hospitals in Syracuse and elsewhere have failed at this before.

That’s why Community is developing the initiative with Upstate, with its larger base, its broader specialty panel, and its established employment opportunities – at the same time we continue to work with private practitioners.

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