A small St. Louis hospital system quietly has been gobbling up group practices representing about 10% of the city's primary-care physicians.
Deaconess Health System, which operates two hospitals with 460 staffed beds, is expected to announce this week the formation of a medical group with 110 physicians. About two-thirds of the group are primary-care physicians. The St. Louis Medical Group will pursue managed-care contracts with employers and insurers as well as service agreements with other hospitals.
The system will begin marketing the group on April 25 through a series of newspaper and business journal advertisements. The amount to be spent on the campaign wasn't disclosed. The ads aim to attract additional physicians and to alert the St. Louis business community to Deaconess' strategy, said Jerry Paul, the system's president and chief executive officer.
Amid the publicity surrounding the rash of hospital mergers and affiliations in the St. Louis area, Deaconess' acquisition activities appear to have drawn little attention.
"This is not a strategy for filling hospital beds," Mr. Paul said. "We are looking to develop a whole new revenue base that might not ever be related to the hospital."
Deaconess has bought the assets of about 10 medical groups. The annual gross billings of the physicians, now Deaconess employees, equal about $25 million. Deaconess has annual net revenues of about $250 million, Mr. Paul said.
