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February 25, 1999Burns Clinic bought out by hospital groupNorthern Michigan Hospital's parent organization steps in to stave off doctor exodusBy CARI NOGARecord-Eagle staff writer PETOSKEY - The Burns Clinic that Petoskey residents have turned to for more than 65 years won't exist after April 1, but its doctors will still be serving the region. Healthshare Group, parent organization of neighboring Northern Michigan Hospital, announced Tuesday it will intervene to end the 40-year management contract a Tennessee company began with Burns in 1994. Financial terms were not released, but the deal reached in principle means Nashville-based PhyCor will release the 75 to 80 doctors from the non-compete clauses which barred them from leaving Burns and setting up local practices unless they paid hefty penalties. Those physicians will in turn be expected to sign an agreement with Healthshare Group to practice in the community for at least three years. Some, such as neonatologists and infectious disease specialists, may also be employed directly by Northern Michigan Hospital. "All along, our primary goal has been to protect our community's health by making sure residents have the care they need and deserve," Jeff Wendling, Healthshare Group president and chief executive officer, said in a statement. Burns Clinic Executive Director Chris Dugger agreed. "Patients should feel confident that the same physicians and level of services they've had at the Burns Clinic will continue to be available to them," he said. The Healthshare Group stepped in to the Burns Clinic impasse last month to try and "stabilize the medical community," according to the release. Specifically, they wanted to stem a tide of departing doctors. Low reimbursement levels from Blue Cross Blue Shield - the dominant health insurer in the Petoskey area - were one reason behind the exodus. The low rates led the clinic to decide last year not to participate with the Blues, although that decision was later reversed after a community outcry. The contract with PhyCor also required Burns doctors to pay PhyCor 15 percent of their profits in return for management of the clinic. No one from PhyCor was available for comment Wednesday, but Dugger said the PhyCor fees were not the driving reason doctors were leaving. "I think that the physicians at Burns Clinic sort of collectively came to the decision that they did not want to continue in a multi-specialty environment. They wanted the increased autonomy that would be possible practicing as independent physicians or small-group practices," he said. Dr. Gus Lo thinks money has quite a lot to do with it, however. He runs Quick Care Family Medical Center in Petoskey and said he has served as a spokesman for an informal coalition of non-Burns Clinic physicians as the community has mulled its medical situation. According to a lawsuit Burns filed last month against three doctors who left and opened local practices, doctors had to pay a year's salary or $140,000, whichever was higher, if they established offices in Emmet County within 18 months of leaving the clinic. "Now, the hospital has bought that out for them. It's like freeing the slaves," Lo said. "It's good for the physicians." Money is also a motivation for Healthshare Group as the parent of Northern Michigan Hospital, Lo believes. "As these physicians leave the community, the number of procedures and admissions to the hospital drops. As those drop, their revenue drops," he said. "They were going to lose a lot of money if these physicians left town." Lo said he is glad that most of the Burns physicians will likely stay in the area, especially providers of unique specialty care. However, he questioned whether all the doctors would be needed and if Healthshare Group, as a non-profit entity, should be buying out a for-profit company like PhyCor. "Since this is supposed to be for the community good, is it the right thing to use this non-profit organizational money to retain all these physicians?" Lo asked. Dianne Litzenburger, Healthshare Group director of communications, said the number of doctors who will be retained is yet to be determined, since it is up to them to agree to the three-year arrangement with Healthshare. "Obviously we believe there's a need for a broad base of physicians to serve this community," she said. "Our whole motive to do this has been to assure that there is physician and hospital care in this community." Besides physicians, Burns Clinic employed about 420 other people, Dugger said. They may be hired by the new, smaller physician practices or the medical services organization that will be formed to offer doctors services such as billing, records, and information technology. Besides the main building in Petoskey, Burns operated three other facilities there, as well as clinics in Gaylord, Bellaire, Rogers City, St. Ignace and Sault Ste. Marie. All are expected to continue operating. Steward Sandstrom, executive director of the Petoskey Regional Chamber of Commerce, said while he's sorry to lose Burns Clinic as a member of the community, he hopes its doctors now have the stability they need to remain. The chamber has held seminars recently on how doctors can open their own practice. 'I think the doctors should have a sense of security now, a sense of comfort," Sandstrom said. "Next, we need to make sure that the rest of the people have that same level of comfort. I know there are skilled employees there considering opportunities elsewhere, and I hope they'll hold out for a few weeks until they have something to compare it to." |
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