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After the breakup: What doctors can do when hospitals split up

When merged health care organizations part ways, it can leave physicians in a pinch. Or with new opportunities.

By Katherine Vogt — Posted Oct. 24, 2005

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Experts say that at least once or twice a year, a hospital system breaks up. And some believe that the number of breakups could increase in coming years, with regulators beginning to take closer looks at existing mergers.

Not only can these "de-mergers" be extremely costly, cumbersome and destabilizing for the institutions involved, but they also can leave physicians feeling like they have been caught in the middle, squeezed by both sides like children whose parents go through a divorce.

Physicians in those situations should be prepared for a transition period that could affect their practices with changes to the facility's vendor relationships, credentialing practices, quality standards, leadership and more. And all of those changes can combine to prompt physicians to reconsider where they practice.

This doesn't necessarily have to be a bad thing, particularly if you're an independent physician without an exclusive contract at a hospital. Some experts say those physicians can benefit by hospital systems that were once one now competing for doctors' services.

Still, they say, the process is long, and not so easy.

A Texas tussle

One particularly messy split has been unfolding in Houston, where after roughly 50 years of partnership, Baylor College of Medicine and the Methodist Hospital decided to go their separate ways, citing differing strategic visions.

The breakup, announced in April 2004, has been anything but easy, and recently the state attorney general stepped in to try to force the ex-partners to quit feuding.

Not only have both entities had to spend undisclosed sums of money on consultants, lawyers and recruiting, they also have had the daunting task of deciding who should get to retain shared staff members.

For physicians, the split has meant that some were forced to uproot their practices, choosing one side or the other.

Marc Boom, MD, executive vice president of Methodist Hospital, said that after the partnership ended and Baylor realigned itself with St. Luke's Episcopal Hospital in Houston, some physicians faced tough choices about where they should practice.

"That precipitated a lot of physicians thinking hard," he said. "Some physicians decided that they indeed would move to St. Luke's and make that their primary practice site along with Baylor, and some decided to stay at Methodist."

He acknowledged that this created a "difficult time" and said the hospital had tried to make the transition as smooth as possible.

"Physicians value autonomy, value being able to make their own decisions about their futures and their patients. I know, unfortunately, many of them have felt that has not been in their control. But we've tried to be as sensitive to that as possible," said Dr. Boom, an internist.

Since the split, Methodist has teamed with Weill Medical College of Cornell University in New York to help keep its academic medicine mission alive. It is still working to recruit some of the shared chair positions it lost, develop its education programs and position itself to become a top research center. Although the changes have been hard, Dr. Boom said, they are also revitalizing.

"A lot of us are really energized and moving at a pace that we would not have imagined," he said. "There are not many dull moments, and a lot of us are working real hard."

Baylor officials are reluctant to talk about the split. Spokeswoman Lori Williams said the state attorney general's office had been holding discussions with both parties and requested that no comments be made until those discussions were completed. Physicians contacted by AMNews also would not comment.

Taking time

Not every split is going to involve a state attorney general, but every split does take time.

R. Kenneth Gordon, a health law attorney with Baker & McKenzie LLP in Dallas, said it could take several months or even a year for the institutions to separate, and that is excluding some of the reorganization work that will need to be done afterward.

"The challenges resulting from the separation do not end with the legal separation, because you still have your operational systems, processes and relationships to hone and refine," he said.

Part of the reason it can take so long is that such splits can force each organization to redevelop services that had previously been shared, such as IT departments.

The entities also might have to renegotiate purchasing chains and vendor relationships, which could factor into physicians' satisfaction with the facility.

Additionally, one or both of the organizations might be required to get new licensing.

"It is a lot of work. And a lot happens quite chaotically because it happens quickly and without adequate planning," Gordon said.

The work also can include significant recruiting efforts to fill positions that used to be jointly held. Warren Ross, MD, a former dean of Drexel University College of Medicine in Philadelphia who now does academic health care recruiting for Korn/Ferry International, said the recruiting activity and the creation of new positions could be very disruptive to those already working at the institutions as they start to fret about the stability of the environment or the prospect of having a new boss.

"It's a tremendously destabilizing force. And it will cost both of these organizations money to hang on to those people," he said.

Physicians who are employees of one of the organizations will have few options in the wake of a split, Dr. Ross said. They likely will remain employees of one organization or the other. "You really are limited by what your employer wants to do," he said.

But he believes that independent physicians may be able to take advantage of a split, because it could create a situation where two hospitals are vying for their services.

"For those who are in private practice, there is a good deal more flexibility. In fact, it can be a plus. They can play off each other. Each party wants the patients that that physician admits and wants access to his expertise," he said.

Still, some physicians who have exclusive contracts with hospitals such as radiologists might be limited in what they can do after a split. "They can find themselves having to make a decision about whether they are going to cover one hospital or the other," Dr. Ross said.

Gordon said the institutions typically work very hard to ensure that their operations aren't affected by a breakup. "The great effort is to make sure that patient care is not interrupted and the support for that patient care is not interrupted," he said.

And during the interim, if the institution is in upheaval, he said independent physicians have the option of avoiding the storm by sending their patients to other facilities.

"Most physicians are not employed by a hospital, so they have a freedom of choice about where to admit a patient, and that freedom allows them to wait out the challenges of that separation or decide to put patients in both hospitals," Gordon said.

But the impact of ending a long-standing partnership can be keenly felt by physicians and may be a drain on their time, said Mike Anthony, a Chicago-based health attorney with McDermott, Will & Emery LLP, and a former senior vice president of the American Hospital Assn.

"It leaves the physicians in a position of spending a lot of time reconstituting things and dealing with administrative things," he said.

For example, formerly shared teaching programs must be redeveloped, and separate leaders will have to develop their own benchmarks for quality.

Additionally, physicians might have difficulty providing continuity of care to some patients because affiliations with home health programs, nursing homes or others have been affected.

"It's very difficult on the doctors," he said. "And physicians don't have a lot of time [for it]. This is carve-out time from their practice."

Anthony said few completely merged entities ever split because it is simply too hard logistically. But it is not uncommon for organizations with joint operating arrangements, some financial integration or affiliations to pull apart when differences arise.

Gordon believes that more splits could be on the horizon if the Federal Trade Commission is successful in what appears to be a new crackdown on hospital consolidation. The FTC is currently seeking to break apart a merged hospital system in Illinois, and some legal observers believe it is just one of several hospital mergers the regulatory agency is scrutinizing.

"If the FTC prevails, then we will see more separations. The repercussions are quite significant. To the extent that the staffs were consolidated -- medical staffs, nursing staffs, administrative staffs -- the hospitals will probably have to staff up to operate two hospitals separately," he said.

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ADDITIONAL INFORMATION

A split -- and regrouping

After their long partnership ended, both The Methodist Hospital System and Baylor College of Medicine had to work quickly to reposition themselves as competitive separate entities. Here is a timeline showing highlights of their endeavors:

April 2004: The longtime partners split, saying they have different strategies for the future.

April 2004: St. Luke's Episcopal Hospital in Houston becomes Baylor's primary teaching hospital affiliate.

June 2004: Methodist announces that its new primary affiliation will be with Weill Medical College of Cornell University and New York-Presbyterian Hospital in New York City.

February 2005: Methodist enters into a 30-year agreement with the University of Houston System to jointly develop health service and education programs and participate in research efforts.

June 2005: Baylor opens a new outpatient facility known as the Baylor Clinic.

June 2005: Leaders of Baylor and St. Luke's vote to enter exclusive merger negotiations, strengthening their existing bond.

July 2005: Christus St. Joseph Hospital in Houston agrees to transfer its five residency programs to Methodist.

September 2005: Baylor breaks ground for a new eight-story biomedical research building.

Sources: Baylor College of Medicine and The Methodist Hospital System

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