ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, June 5, 1996 TAG: 9606050068
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
For more than $20 million, Roanoke's Carilion Health System has added 76 physician employees and bought a stronghold in the New River Valley.
Five of the doctors who have agreed to sell their practices to Carilion are affiliated with Montgomery Regional Hospital, Carilion's main New River Valley competitor. Three of the five have been on the Montgomery hospital's board of trustees.
Six Roanoke Valley practices also are part of the deal, which Carilion announced Tuesday, but the Blacksburg and Christiansburg doctors were the key, all parties say.
Don Lorton, Carilion's executive vice president for strategic services, would not say how much each practice cost, but said the overall price was "north of $20 million."
Carilion, which owns Radford Community Hospital, and Montgomery Regional's owner, Columbia/HCA Healthcare Corp., are jockeying for dominance in the New River area. By acquiring the New River practices, Carilion is in a position to control where patients are referred for hospitalization.
The purchase contracts don't include any provision for that, however, Lorton said.
Lorton did say that the New River doctors, all primary care physicians in solo practices, will be combined in the next year in a new office to be built in Montgomery County.
One of the physicians, Dr. William Hendricks of Blacksburg, said he is sensitive to concerns about how the practice purchases could influence referrals.
"I will not be telling patients they have to go to Radford," Hendricks said. "The patient preferences will be honored, and patients will be given a choice."
But he said that he expects the referral patterns to change over time, with more patients of Carilion doctors going to Radford Community Hospital.
Hendricks just resigned as a trustee of Montgomery Regional but plans to retain physician privileges there.
The decision to sell his practice was difficult, he said. He has been at the same site since he opened in 1976.
"You talk to your colleagues, read books and journals, and try to find out as much as you can, and then make your decision based on your application of the information," Hendricks said. "The focus of concern and care is and must remain the patient in order for this to be beneficial for the community and to the physicians."
"This is not an anti-Columbia move," said Dr. Lucian Robinson, who has had a Blacksburg practice for 20 years and served as a Montgomery Regional trustee until his term expired in March.
"We're going to continue to try to provide cost-effective care. I don't intend my dealings with patients to change in any substantive way," Robinson said. "Managed care was coming down the pike whether I want it to or not, and we have to deal with it in a constructive manner. This seemed to be best way to deal with that."
Robinson said he hasn't told his patients about his decision because there was "nothing to tell them right now."
The physicians involved in the transactions represent an area from Martinsville to Harrisonburg. They were members of the Blue Ridge Primary Care network, formed in 1993. The network had been looking for a partner since last fall and had talked to several potential buyers, including Columbia/HCA.
Columbia is the nation's largest for-profit hospital company. Among its holdings are Lewis-Gale Hospital in Salem, Columbia Pulaski Community Hospital and Alleghany Regional Hospital in Low Moor. It has headquarters in Nashville, Tenn.
No Columbia officials could be reached for comment Tuesday.
Under the terms of the purchase agreement, a five-year business plan will be established for Carilion Healthcare Inc., which is the subsidiary that owns the practices. A board of eight physicians and four Carilion administrators will see that the plan is carried out, Lorton said.
Lorton said it would take 18 months to two years for Carilion to install computerized record keeping in the practice offices. The first change patients likely will notice is that bills will be on Carilion forms. Also, patient satisfaction surveys will become routine in the practices.
Patient satisfaction scores will be one of the measures to which physician compensation eventually will be linked, Lorton said. Another will be the health of patients. A doctor might be judged on how well he or she decreases the number of patients who smoke or increases immunization rates for children, he said.
Hugh Thornhill, who has been managing the practices of the 59 primary care physicians who already work for Carilion, will become administrative director of Carilion Healthcare. Lorton said Carilion also will employ the 250 or so nonphysician employees of the practices just bought. A medical director also will be selected.
More doctors or nurse practitioners might be recruited for some of the practices, because the practices already have as many patients as the doctors can handle, he said.
He also said that four more doctors are involved in the purchase, but were not identified Tuesday because they are in practices in which other doctors decided not to accept Carilion's offer.
Those practices have an extension on the purchase deadline while the doctors decide how to split up, Lorton said.
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