In February, Fountain Valley, Calif.-based MemorialCare Health System finalized its affiliation with the 400-physician Greater Newport Physicians group and also acquired physician management company Nautilus Healthcare Management Group.
The physicians of the Greater Newport group will become part of the new Independent Practice Association division of MemorialCare Medical Foundation — a non-profit medical management organization that allows physicians and MemorialCare hospitals to work together (California prohibits hospitals from directly employing physicians). The employees of Nautilus will help manage the billing, accounting, electronic medical record implementation and other physician practice support services for MemorialCare Medical Foundation, which represents more than 2,000 physicians.
It's not uncommon to see health systems like MemorialCare pursue partnerships with physician organizations in the hope of becoming a population health provider. Barry Arbuckle, PhD, president and CEO of MemorialCare Health System, was able to talk about the system's recent deal and what it means in the grander context of hospital-physician alignment and population health.
Question: MemorialCare Health System recently affiliated with the Greater Newport Physicians and acquired a physician management group to add to its already fast-growing medical foundation. Can you explain some of the historical context of why this was done?
Dr. Barry Arbuckle: Historically, we are a hospital system. We've made a marked evolution to a health system with urgent care and retail health centers, ambulatory surgery centers, independent physician associations — it's a way for hospitals to partner and align with physicians and other compatible organizations.
Our most significant first activity dates back 16 years when we created our MemorialCare Physician Society. It came at a time, the mid-1990s, when there were rampant physician practice acquisitions and seeming irrational exuberance. Over the years that followed, we observed a number of acquisitions from other health systems that crashed and burned, and some had to be disentangled. This was early for me in my career. I attended meetings with credit rating agencies, and I'll never forget the pointed questions: "Why aren't you acquiring physician practices?" and other questions critical of us. We just didn't think that was the right strategy at that time, but what was interesting was two years later, the same rating agencies would say, "Please tell me you haven't bought physician practices." Now, value is being put on the physician practice again. But it is a new era — an era of provider integration and more mature infrastructure and systems.
Q: With this affiliation with Greater Newport Physicians, you'll be adding roughly 140 primary care physicians and 250 specialists to the MemorialCare Medical Foundation. How important is the primary care base in MemorialCare's current organizational strategy?
BA: About two years ago, research and physician interviews gave us an in-depth sense of areas in the next decade where we would have shortages of certain physicians. Primary care shortages were a given, but we identified several specialty areas where we would have gaps. In our family residency program, for instance, we train family practice physicians from start to finish and graduate eight per year. It's a great breeding group for our hospitals' primary care needs. But as generations began to evolve, looking for the employment model — upwards of 80 percent want to go into employment — we were losing most of these family physicians because we didn't have a mechanism to capture them. So we started our medical foundation early last year to offer this vehicle. We could either build it ourselves or align with experience, proven and successful medical groups in Orange and Los Angeles counties with long track records and an infrastructure that was scalable. We chose the latter.
Q: How do you see these types of physician practice affiliations and accountable care organization efforts affecting how healthcare is delivered both in your state and across the country?
BA: If one believes healthcare is moving toward an ACO or, more generically, a population health model and if we're going in the direction of being responsible for the health of a defined population, we must have a provider network that covers a broad geography. Our goals are to be positioned to go to an employer and partner with a health plan to offer comprehensive services to a defined population. We can care for employees and dependents, prevent hospitalizations, reduce readmissions and move away from the fee-for-service style of medicine. To accomplish this, we need a strong provider network covering a sizable geography, including acute-care, ambulatory and physician sites. The strength and tremendous growth of our medical foundation, addition of new hospitals and ambulatory, retail health and outpatient services strategically located throughout our vast Southern California service areas, and extensive experience in narrow networks and managed care together represent what we believe is necessary to be ideally positioned to provide employers covering a wide region just what they are looking for to improve health and contain costs.
The physicians of the Greater Newport group will become part of the new Independent Practice Association division of MemorialCare Medical Foundation — a non-profit medical management organization that allows physicians and MemorialCare hospitals to work together (California prohibits hospitals from directly employing physicians). The employees of Nautilus will help manage the billing, accounting, electronic medical record implementation and other physician practice support services for MemorialCare Medical Foundation, which represents more than 2,000 physicians.
It's not uncommon to see health systems like MemorialCare pursue partnerships with physician organizations in the hope of becoming a population health provider. Barry Arbuckle, PhD, president and CEO of MemorialCare Health System, was able to talk about the system's recent deal and what it means in the grander context of hospital-physician alignment and population health.
Question: MemorialCare Health System recently affiliated with the Greater Newport Physicians and acquired a physician management group to add to its already fast-growing medical foundation. Can you explain some of the historical context of why this was done?
Dr. Barry Arbuckle: Historically, we are a hospital system. We've made a marked evolution to a health system with urgent care and retail health centers, ambulatory surgery centers, independent physician associations — it's a way for hospitals to partner and align with physicians and other compatible organizations. Our most significant first activity dates back 16 years when we created our MemorialCare Physician Society. It came at a time, the mid-1990s, when there were rampant physician practice acquisitions and seeming irrational exuberance. Over the years that followed, we observed a number of acquisitions from other health systems that crashed and burned, and some had to be disentangled. This was early for me in my career. I attended meetings with credit rating agencies, and I'll never forget the pointed questions: "Why aren't you acquiring physician practices?" and other questions critical of us. We just didn't think that was the right strategy at that time, but what was interesting was two years later, the same rating agencies would say, "Please tell me you haven't bought physician practices." Now, value is being put on the physician practice again. But it is a new era — an era of provider integration and more mature infrastructure and systems.
Q: With this affiliation with Greater Newport Physicians, you'll be adding roughly 140 primary care physicians and 250 specialists to the MemorialCare Medical Foundation. How important is the primary care base in MemorialCare's current organizational strategy?
BA: About two years ago, research and physician interviews gave us an in-depth sense of areas in the next decade where we would have shortages of certain physicians. Primary care shortages were a given, but we identified several specialty areas where we would have gaps. In our family residency program, for instance, we train family practice physicians from start to finish and graduate eight per year. It's a great breeding group for our hospitals' primary care needs. But as generations began to evolve, looking for the employment model — upwards of 80 percent want to go into employment — we were losing most of these family physicians because we didn't have a mechanism to capture them. So we started our medical foundation early last year to offer this vehicle. We could either build it ourselves or align with experience, proven and successful medical groups in Orange and Los Angeles counties with long track records and an infrastructure that was scalable. We chose the latter.
Q: How do you see these types of physician practice affiliations and accountable care organization efforts affecting how healthcare is delivered both in your state and across the country?
BA: If one believes healthcare is moving toward an ACO or, more generically, a population health model and if we're going in the direction of being responsible for the health of a defined population, we must have a provider network that covers a broad geography. Our goals are to be positioned to go to an employer and partner with a health plan to offer comprehensive services to a defined population. We can care for employees and dependents, prevent hospitalizations, reduce readmissions and move away from the fee-for-service style of medicine. To accomplish this, we need a strong provider network covering a sizable geography, including acute-care, ambulatory and physician sites. The strength and tremendous growth of our medical foundation, addition of new hospitals and ambulatory, retail health and outpatient services strategically located throughout our vast Southern California service areas, and extensive experience in narrow networks and managed care together represent what we believe is necessary to be ideally positioned to provide employers covering a wide region just what they are looking for to improve health and contain costs.
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