PhyCor signed a letter of intent last week with New York and Presbyterian Hospitals Care Network to organize thousands of the network's physicians throughout 19 counties in Connecticut, New Jersey and New York.
It's the third and by far the largest hospital joint venture for Nashville-based PhyCor, said Joseph Hutts, the company's president and chief executive officer. It also marks the second move by a major physician practice management firm into the New York market this month. San Diego-based FPA Medical Management revealed plans to acquire Norwalk, Conn.-based Health Partners, which has 333 physicians in the market (July 14, p. 34).
PhyCor's exclusive deal with the hospital network sets the stage for some New York physicians to merge their practices and form long-term equity ties with PhyCor.
The network of 30 hospitals is led by New York Hospital and Presbyterian Hospital, the patient-care arm of Columbia-Presbyterian Medical Center in New York.
The hospitals wanted to move rapidly into managed care and realized they needed to organize physicians, Hutts said.
"I think you're going to see more of those around the country, where hospitals are beginning to realize that the physician company is not a competitor but that the hospital can work effectively with them," Hutts said.
PhyCor and the network will create a joint venture management company through which PhyCor's North American Medical Management subsidiary will develop 21 new independent practice associations and provide capital, administrative support and medical management services to new and existing IPAs. The joint venture company will be compensated with a percentage of the premiums received by the IPAs from their managed-care contracts.