Oct. 11, 1996, is a date that James L. Downey, M.D., has etched in his memory. He was on a retreat for participating physicians sponsored by Northwestern Healthcare, an eight-hospital Chicago area network. The day-and-a-half bull session focused on ways for physicians to come together under Northwestern's mantle. To Downey, who is an assistant professor at Northwestern University Medical School, and other independent physicians in the room, the subject fell flat.
"For the hospitals to be doing our negotiating with managed-care companies just didn't seem right to us," says Downey, a pediatrician on the staff of Evanston (Ill.) Hospital and its Glenbrook Hospital unit in Glenview, Ill.
In the months preceding the meeting, Downey had discussed with other IPA doctors the idea of joining forces, but the talks never moved to brass tacks. The Oct. 11 retreat provided needed focus. That day, he and fellow kindred spirits gathered for after-dinner drinks and discourse. "We found ourselves a little room. . . and made a deal," he said.
By January, the deal was done. Chicago Area Physicians Association, a limited liability corporation, now represents three IPAs with more than 150 primary-care providers. The "super IPA" serves as an umbrella but doesn't own the assets of the individual practices. So, unless the IPA board of managers decides at some future date to merge assets, each IPA will sink or swim on its own merit.
Because the super IPA brings together IPAs of varying sizes and levels of capitation and serving different communities, "That seemed a very important cornerstone of the agreement," Downey says.
Another tenet of the deal was equal representation. Each IPA is a one-third investor in Chicago Area Physicians Association.
The IPA is moving ahead with plans to create a management services organization (currently, each IPA handles its own management functions), and talks about future capitalization have begun.
The IPA will consider bank loans or possibly a capital investment partner to whom the IPA would issue a second class of stock, Downey says.
"Where are we going to get our money? We'll borrow it," he says, adding that he rules out breaking bread with a big practice management company.