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Format: 04/19/2014
Format: 04/19/2014

News

Pittsburgh Business Times: West Penn shifting 30 doctors to Monroeville-based Premier

Friday, July 23rd, 2010

In a breakthrough agreement, West Penn Allegheny Health System will shed 30 employed primary care doctors, who will be picked up by Monroeville-based Premier Medical Associates over the next six months as the two institutions collaborate to further expand primary medical care in Pittsburgh’s eastern suburbs.

Premier, the region’s biggest independent medical practice, also will offer exclusive hospitalist services at West Penn Allegheny’s Forbes Hospital, continuing a three-year agreement that expires next month.

West Penn Allegheny spokeswoman Kelly Sorice said the Premier agreement was reached July 8 and the affected doctors were scheduled to be briefed July 15 on the details.

The deal is key to the future of Forbes because primary care doctors are a big source of hospital referrals and Pittsburgh’s eastern suburbs are West Penn Allegheny’s fastest-growing market. Competition for patients heated up with the University of Pittsburgh Medical Center’s plans to build a hospital about a mile from Forbes Hospital. The UPMC hospital is scheduled to open in 2012.

The deal also promises to pare West Penn’s losses while bulking up Premier to roughly 80 physicians from around 50 today. WPAS Primary Care Network Practices, a unit of the hospital system which controls contracts for 600 employed doctors, reported $14 million in losses in 2008, according to Internal Revenue Service filings.

The Premier deal was reached after nine months of negotiations and UPMC’s failure to reach terms with Premier last year.

The deal also is the biggest shift in physician affiliation in the region since the $1.3 billion bankruptcy of West Penn Allegheny’s predecessor hospital network in 1998. West Penn Allegheny has struggled in recent years, reporting an operating loss of $11.6 million for the nine-month period ending March 31, the most recent figure available.

Premier Executive Director Mark DeRubeis did not return telephone messages and Susan Rockman, a lawyer with the Downtown firm of Huston Harbaugh PC, which represents Premier, declined to comment. In addition to around 50 doctors, Premier operates a medical imaging center in Monroeville.

Jeff Schaub, senior director at Fitch Ratings, said he was not familiar with the Premier deal, but said such a move would be in keeping with the system’s reorganization plans, which he has reviewed.

“In that market, back to the 1990s, there was a very strong acquisition pattern,” he said. “They’ve been very deliberately looking at all of these physician contracts, making sense of which ones to keep and which ones not to keep.

“It’s happening in a lot of markets.”

Hospital networks have been willing to absorb losses on physician practices in return for such things as patient referrals for laboratory work, imaging services and hospital admissions, Schaub said. Losses for physician practices are “not unusual at all,” he said.

The realignment of doctors in the eastern suburbs also positions West Penn, the region’s second-largest hospital network, for the era of bundled reimbursement from Medicare, according to Tom Tomczyk, principal at the Downtown offices of Buck Consultants. Medicare is conducting pilot projects based on global payments and patient outcomes rather than fee for services.

“It seems to me that providers in general are just scrambling,” he said. “The federal government is trying to cut costs, and the first people they look at are the providers.

“The name of the game is increased capacity.”
 

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