A new hospital company has entered the market with the contrarian idea that hospitals don't need to be part of a network to compete for managed-care contracts.
Houston-based HealthPlus Corp. is a regenerated company that started operations in late December. Previously it had been operating under the name Mid America Healthcare Group, which sold all four of its hospitals to Nashville-based Columbia/HCA Healthcare Corp. in 1995 (Sept. 25, 1995, p. 6).
It took Mid America about a year to sell the facilities to Columbia, and HealthPlus wasn't formed until it secured $30 million in venture capital backing from New York-based Bruckmann, Rosser, Sherrill & Co., says Mac Burt, HealthPlus' chief financial officer. The company's management team has an undisclosed stake in the privately held company.
John Styles, chairman and chief executive officer of two-hospital HealthPlus, says the company will target urban and suburban acute-care hospitals. Styles says the facilities won't need to be in networks to be successful in managed-care contracting.
"We think there are hospitals out there that have a niche that serves their communities," says Styles, who has been joined by several other members of Mid America's top management, including Burt.
Burt says the company's philosophy will include pursuing physician syndications at hospitals where physician investment makes sense.
"We believe that integrating physicians really enhances patient care," Burt says. "But we don't believe you have to be a system to be successful."
HealthPlus plans to create limited partnerships where physicians hold a minority interest in the local hospital, Styles says.
Physician syndications are risky because they may create an improper financial incentive for physicians to refer patients to the hospital in which they have an ownership interest. Recently proposed federal regulations would allow physicians to invest in whole hospitals but not specific hospital services (Jan. 12, p. 6).
Last month, HealthPlus closed on its first long-term lease with what used to be 43-bed Yale Clinic and Hospital in Houston. Styles wouldn't disclose the length of the lease but did say the company plans to more than double the number of beds and change the facility's name to Doctors Hospital-Tidwell.
HealthPlus also owns 80-bed Normandy Community Hospital in St. Louis, a facility HealthPlus executives purchased with their own assets before the company was official. HealthPlus partnered with nearly 30 physicians to buy the facility.
Styles says the company has several deals pending, but he declined further comment.