Health Care and Insurance and Technology

Doctor group spreads its reach across state: American Health Network sees big growth in 2005

October 31, 2005

American Health Network started 2005 with no presence in the cancer-fighting field of oncology.

Now the Indianapolis-based doctor network boasts the largest medical oncology practice in the state, said Dr. Ben Park, its president and CEO.

Within the past several months, Park has watched his network add oncology practices with 32 locations across the state, 10 family physicians in Muncie, and a $4 million Fishers Medical Arts Building, built in partnership with Indianapolisbased OrthoIndy.

He expects to see more growth. The network, which now includes roughly 200 doctors, is on track for another dozen or so this year in Indiana and Columbus, Ohio.

Its leaders would like to see it cover all of Indiana, possibly within five years.

"We have pretty good statewide coverage," he said. "There's some areas that we're not in, but we're filling in those holes."

When American Health Network adds a practice, it buys the assets and employs the doctors, who also take an ownership stake in the network.

The arrangement lets doctors continue to manage their practices but reduces their overhead, boosts their negotiating clout, and gives them access to additional resources like labs and ultrasound equipment.

The strategy won over Dr. Steve Farmer, a Muncie-based family physician. Farmer and nine other doctors left Cardinal Health System in July to join American Health Network.

The network is building a 40,000-square-foot office for the doctors that will include a pharmacy, imaging center and urgent care wing, among other amenities.

"Most physicians are not businesspeople," Farmer said. "However, with their model you can still control your practice while having the support of a centralized corporate office there in Indianapolis."

American Health Network hasn't aggressively sought growth in the past, but Park said it's "getting more organized now to start talking to physician groups and telling our story."

He has several selling points. The network, for instance, provides malpractice insurance, a human resources staff and contract negotiations with insurers.

It also provides technology. He said about 20 percent of its doctors use electronic medical records. By the end of 2006, all of them will.

"You look at the new residents coming out-these are the kinds of tools that they're expecting people will have," he said.

Park said the network began growing faster about a year ago, thanks in part to increasing financial pressures on medical practices, including declining reimbursements from private insurers like WellPoint.

"With [doctors'] overhead going up and our reimbursement going down, people are looking to find alternative business models for practice, and we have one that's quite good," he said.

Park says the network has been "consistently profitable" since 2000, a dramatic turnaround from its early days.

The company was founded in 1994 by the health insurer now known as Well-Point. Doctors purchased it in 1998, and the company promptly lost $24 million in the first year under physician ownership.

American Health Network was able to get on track with the help of low-interest loans from WellPoint and by implementing a business plan aimed at cutting costs and increasing revenue.

The network's growth in Indiana and Ohio pushes it into rare geographic territory for doctor groups, said Terry Heath, a health care attorney and partner with the Indianapolis firm of Hall Render Killian Heath & Lyman. Networks typically grow strong in a single area, as Arnett HealthSystems has in Lafayette.

Heath said a long-standing debate in the industry focuses on whether health care is best delivered by locally based providers or by bigger companies with a presence in many markets.

American Health Network straddles the fence on the issue. It keeps decision-making local as its spreads across the state.

It forms a "care council" with four or five practices in an area, said Mike Kirschner, the network's chief financial officer and chief operating officer. That council decides when to hire doctors and when to take steps like installing new imaging equipment. Each practice decides which services its community needs.

After that, Kirschner said, "American Health Network just provides the capital and infrastructure to meet the physician's dreams."
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