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Hospitals add even more docs

J.K. Wall
May 9, 2011
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Hospitals continue to scoop up physician practices with abandon.

Indianapolis-based Indiana University Health grew its stable of physicians in Bloomington with the May 1 acquisition of two practices employing a total of 28 doctors and nurses.

And Franciscan Alliance, a Mishawaka-based system that operates three hospitals in the Indianapolis area, is moving to close on its acquisition of the 60-doctor Hammond Clinic. In April, Franciscan also bought an outpatient surgery center in Munster, which Hammond Clinic partly owned.

For the past two years, major hospital systems have been buying physician practices aggressively in preparation for changes spurred by the 2010 health care reform law, which will give financial incentives to doctors and hospitals that work together to keep patients healthier and needing less hospital care.

Most hospitals have decided they need to employ large chunks of their medical staffs, formed into entities called accountable care organizations, to capitalize on those incentives.

Primary care doctors have been tops in hospitals’ sights because they are often a patient’s first point of a contact with the health care system. They also tend to generate a lot of hospital revenue for relatively modest pay. The average primary care doctor produces hospital revenue topping $1.6 million per year—more than nine times their average salary, according to a 2010 survey by Texas-based consulting firm Merritt Hawkins.

Hospitals also have been acquiring specialist physicians—particularly heart and bone surgeons, who can produce referrals to keep operating rooms filled.

The two practices acquired by IU Health this month are Southern Indiana Pediatrics and Orthopedics of Southern Indiana.

The pediatric practice has 20 doctors and nurses working from offices in Bloomington, Ellettsville and Bedford. The orthopedic practice has eight surgeons and advanced practice practitioners in Bloomington.

They will now be part of IU Health Southern Indiana Physicians, which before the acquisitions had 16 doctors and nurses. IU Health also operates hospitals in Bloomington and Bedford.
 

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  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

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