Because of its size and reputation, Medical City is a core holding and is pivotal as Columbia builds a "Super PHO" and MSO in the Dallas/Fort Worth area.
Columbia plans to help physicians form IPAs at each of the 16 hospitals. The IPAs and hospitals would combine forces in a Super PHO that would serve the entire market of 3 million residents.
Intertwined in that strategy is a plan to form a not-for-profit MSO for the Super PHO. The MSO would be a third-party administrator for managed-care contracts and for the hospitals' IPAs.
Shortly after it bought Humana's hospitals, Columbia began to urge Dallas-area physicians to launch the IPAs that would lead to the formation of the Super PHO.
For example, in spring 1993, 30 physicians selected by Columbia were brought in for a retreat at a local Holiday Inn, where Highgenboten said a consultant spent nearly two days "demonstrating her abilities to teach by repetition and fright" with "horror stories emphasizing the reasons we should come together."
Yet getting physicians to participate in the IPA became problematic. At one point, a group of anesthesiologists turned down Highgenboten when he tried to get it to join the IPA. In the letter he notes: "I find it hard to understand how a group (that) competes in a specialty with such a massive oversupply can turn their back on an opportunity to participate in an organization that offers them access to more patients at their home hospital."
More problems developed when Columbia tried to form an MSO with 10-year exclusive contracts with the IPA. "If that is not a blatant attempt to gain perpetual control of the physicians, I have never seen one," Highgenboten noted.
However, 10-year contracts with MSOs aren't extraordinary. Often hospital systems that commit to setting up an MSO and the necessary support personnel want a guarantee that physicians will stay with the MSO for at least 10 years.
Many MSOs forming in Texas require physician groups to sign on for periods much longer than 10 years. One Dallas-based firm, Physicians Resource Group, recently acquired the practices of 10 eye-care practices, which signed 40-year management contracts.
Physician strategy for Columbia/HCA Healthcare Corp.
Appointed pediatrician Frank Houser, M.D., as
president of physician management services to
coordinate companywide physician game plan
Will continue physician syndication model
Operates 367 PHOs at its hospitals