Franciscan, IU Health woo more docs

J.K. Wall
June 6, 2011
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So much for that prediction. A week after a report declared Indianapolis hospitals nearly saturated on physician hiring, two more deals were announced.

Franciscan St. Francis Health acquired Kendrick Regional Center for Colon and Rectal Care, adding Kendrick's six surgeons to its 150-doctor St. Francis Medical Group.

And Indiana University Health Physicians nabbed the remaining nine (out of 13) physicians of University Dermatology Inc., bringing its total employed physicians to more than 550.

Both deals closed June 1—just five days after the Center for Studying Health System Change issued a report saying Indianapolis was nearing a saturation point on hospital employment of physicians.

Indianapolis’ major hospital systems have been trying to gobble up physicians for the past three years. Especially attractive to them are surgical specialists, such as the Kendrick doctors.

Kendrick had a close connection to St. Francis, with its surgeons practicing at St. Francis’ Beech Grove, Indianapolis and Mooresville hospitals. The surgeons also perform surgeries at other hospitals.

Kendrick operates a colorectal surgery residency program and its physicians participate in clinical trials of new products and procedures for colon cancer and rectal cancer.

University Dermatology is filled with physicians who are also professors at IU School of Medicine. IU Health has been trying for more than two years to consolidate physicians employed by IU med school and its Methodist Medical Group. The practice has eight locations in the Indianapolis area, with one more opening in July.

Physicians are interested in becoming hospital employees because their reimbursement rates have been crimped and opportunities to enhance their revenue streams—through physician-owned surgery and imaging centers—have been curtailed. At the same time, physicians are being forced by the federal government to adopt electronic medical records systems, a significant expense.

Hospitals are happy to employ physicians to increase referrals to their facilities. Also, health plans are adopting payment methods to require physicians and hospitals to work closely to keep patients healthy long term or to split payments for complex episodes of surgeries.

The Center for Studying Health System Change, based in Washington, D.C., said hospital employment of physicians got going sooner and has proceeded faster in Indianapolis than in other markets.


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  1. You are correct that Obamacare requires health insurance policies to include richer benefits and protects patients who get sick. That's what I was getting at when I wrote above, "That’s because Obamacare required insurers to take all customers, regardless of their health status, and also established a floor on how skimpy the benefits paid for by health plans could be." I think it's vital to know exactly how much the essential health benefits are costing over previous policies. Unless we know the cost of the law, we can't do a cost-benefit analysis. Taxes were raised in order to offset a 31% rise in health insurance premiums, an increase that paid for richer benefits. Are those richer benefits worth that much or not? That's the question we need to answer. This study at least gets us started on doing so.

  2. *5 employees per floor. Either way its ridiculous.

  3. Jim, thanks for always ready my stuff and providing thoughtful comments. I am sure that someone more familiar with research design and methods could take issue with Kowalski's study. I thought it was of considerable value, however, because so far we have been crediting Obamacare for all the gains in coverage and all price increases, neither of which is entirely fair. This is at least a rigorous attempt to sort things out. Maybe a quixotic attempt, but it's one of the first ones I've seen try to do it in a sophisticated way.

  4. In addition to rewriting history, the paper (or at least your summary of it) ignores that Obamacare policies now must provide "essential health benefits". Maybe Mr Wall has always been insured in a group plan but even group plans had holes you could drive a truck through, like the Colts defensive line last night. Individual plans were even worse. So, when you come up with a study that factors that in, let me know, otherwise the numbers are garbage.

  5. You guys are absolutely right: Cummins should build a massive 80-story high rise, and give each employee 5 floors. Or, I suppose they could always rent out the top floors if they wanted, since downtown office space is bursting at the seams (http://www.ibj.com/article?articleId=49481).