One year after buying Frontier Cancer Center, St. Vincent Healthcare has purchased two more private practices in Billings — the Montana Heart Institute and Big Sky OB/GYN.
The purchases completed at the end of January occurred as the fundamentals of U.S. health care are changing dramatically, said St. Vincent’s acting chief executive and president Steve Loveless.
“Even as that landscape shifts, these are very solid transactions. We’re very comfortable with them,” Loveless said.
St. Vincent is conducting final negotiations with another unnamed private practice and talks are underway with several other practices in and around Billings, said Mike Dowdy, the hospital’s vice president of business development.
“We value the relationships we have with our independent physicians,” he said. “But if there is an interest on their part in becoming part of St. Vincent Heathcare, we are open to those opportunities.”
In 2012, St. Vincent purchased a Neurology Associates and then Northern Rockies Neurosurgeons in Billings and an OB/GYN practice in Cody, Wyo. St. Vincent also signed a practice agreement with West Park Hospital in Cody in 2012.
Consolidation in the Billings medical community is driven by many factors and is part of a national trend to merge smaller practices into larger medical facilities.
According to the American Hospital Association, the number of doctors on hospital payrolls has grown by one-third from 2000 through 2013. The American Medical Association says only four out of 10 pediatricians and family practice doctors are independent now, The New York Times reported.
Factors driving consolidation include federal incentives for larger practices, the transition to electronic medical records and newly minted physicians coming out of medical school with heavy student loan debt who can’t afford to buy or set up a practice.
Like Dr. Dan Molloy and his staff at Big Sky OB/GYN, the dozen staff members at Montana Heart Institute are hospital employees now. But the four Montana Heart cardiologists remain independent, working under professional contract. That is the same model St. Vincent used when it bought an interest in Frontier Cancer.
Back in 1993, the Billings Clinic, then a physician-run hospital, and Deaconess Medical Center merged. Today Billings Clinic has an integrated business model and doesn’t buy practices, spokesman Jim Duncan said.
Loveless said the decision to bring an independent practice in-house isn’t just financial; it can make sense for other reasons, including bolstering St. Vincent’s faith mission, he said.
“How do we sustain continuity of care? How do we insure we are working together seamlessly with the providers?” he said.
The decision to sell Montana Heart to St. Vincent was driven by several factors, including financial, Dr. Edward Dean said.
Reimbursement for doctors treating Medicare cases, for patients who cannot pay, has been declining. Congress usually softens or reverses the cuts, but not last year.
“There was the largest decline in reimbursements to cardiology practices last year and that, in and of itself, puts a great pressure on our practice,” Dean said. “At the same time, they were incentivizing doing the same work inside a hospital-based clinic.”
The Affordable Care Act continues the trend toward rewarding larger health care groups over smaller ones.
“This is a necessary step to become more integrated in order to provide these services,” Dean said.
Two years ago, the cardiologists invested in electronic record keeping software. Now record keeping will be integrated with St. V’s system, which should make it easier for patients because more records can be shared quickly, he said.
The only other changes patients will see is a remodeling of the office and bills coming from St. Vincent.
“We actually believe we’ve had a very efficient, very thoughtful, very well-organized practice for many years and that we have strong relationships with our patients and their referring physicians,” Dean said. “We want to maintain all of that.”
A February series by The Kansas City Star said some U.S. hospitals that have purchased private medical practices tack facility fees on top of what the patient pays the doctor.
Both Billings medical centers said they do not charge facility fees.
While saying he’s very concerned about rising health care costs and the burden to patients, Dean said he’s glad to turn over billing duties to St. V’s.
“I don’t think you get good health care if everything you decide is always going to be the cheapest,” he said.
The latest two purchases are break-even or positive financial deals for St. Vincent, Loveless said.
“We don’t feel like we’ve got to own the world,” he said. “We really feel strongly there’s a place for the independent practice moving forward, even with all the changes in health care.”