Two major specialty-physician companies have created divisions to acquire practices that handle high-risk pregnancies.
Pediatrix Medical Group, which provides physician services at 108 neonatal intensive-care units, established a subsidiary called Obstetrix Medical Group in March. So far, it manages about 20 perinatologists in five markets.
That followed a recent acquisition by specialty network manager Vivra of a prominent 10-physician perinatology practice in Phoenix called PeriLink.
In addition, Hollywood, Fla.-based Sheridan Healthcare has purchased perinatology practices. It recently entered a long-term management agreement with a two-physician hospital-based perinatology practice in Texas.
Both Pediatrix and Vivra have seen increased emphasis by HMOs on managing the cost of high-risk pregnancies and premature births, which can run into the hundreds of thousands of dollars per case. However, their strategies vary widely.
Pediatrix hopes perinatologists will generate referrals to its neonatologists and to the hospitals where they practice. Most of its business is discounted fee-for-service.
The company also will partner with its hospital clients to recruit perinatologists to new markets, said Chief Financial Officer Larry Mullen.
"Right now, we're kind of passive, sitting in the hospital waiting for patients to come to us," Mullen said.
Vivra, on the other hand, is banking on perinatologists to improve its ability to manage high-risk pregnancies in its capitated OB-GYN networks. The networks cover about 1 million HMO enrollees in five markets: Atlanta, the Baltimore-Washington corridor, Florida, metropolitan New York and New Jersey, and Virginia.
HMOs, particularly those in Medi-caid, are "very conscious" of the need to manage costs associated with premature births, including lengthy neonatal intensive-care unit stays, said Jacob Lazarovic, M.D., Vivra's vice president for new business development and clinical affairs.
Eventually, Pediatrix will explore offering a single rate for each high-risk pregnancy all the way through release of the infant from the hospital, Mullen said. He said Pediatrix should be able to improve outcomes by linking perinatologists and neonatologists.
Unlike Vivra, Pediatrix does not see managed-care companies shifting risk to providers. "I think there's a lot of evolution that still needs to take place," Mullen said.
As of last week, Obstetrix had acquired four perinatology physician group practices employing a total of 17 physicians. The acquisitions include Perinatal Consultants in Kansas City, Mo.; Rocky Mountain Perinatal Associates in Denver; Texas Maternal Fetal Medicine in Fort Worth; and an undisclosed five-physician practice in Las Vegas.
In addition, Obstetrix manages a three-physician perinatology practice formed last year at the request of a Pediatrix client, Intracoastal Health Care Systems in West Palm Beach, Fla., which operates St. Mary's Hospital and Good Samaritan Medical Center.
Pediatrix, based in Fort Lauderdale, Fla., established Obstetrix as a wholly owned subsidiary so that it could eventually be spun off in an initial public offering. The arrangement enables Obstetrix to buy perinatology practices with low-priced stock, which is attractive to physicians looking for big potential gains.
Diversifying into perinatology presents a risk for Pediatrix, which dominates the neonatal intensive-care field, said stock analyst Christopher McFadden of Wheat First Union in Richmond, Va. Last month, McFadden downgraded Pediatrix stock to "outperform" from "buy" after the stock hit a price target.
"While we like the perinatology field, we recognize they are not the dominant player in perinatology," McFadden said. "It's a different dynamic."
He expressed concern that acquisitions of neonatology practices could be disrupted if neonatologists insist on getting some of the lower-valued Obstetrix stock.
Vivra anticipates that PeriLink physicians will identify other leading medical groups in the field as possible acquisition targets. Nationwide, there are approximately 1,000 perinatologists, most in very small groups.
Perinatologists don't have to be in the same market as Vivra's physician networks to share their expertise, Lazarovic said.
Premature births used to be immune from the rigors of managed care because HMOs and their medical directors were unfamiliar with the field, said Forrest Whittaker, president and chief executive officer of Deerfield, Ill.-based Paidos Health Management Services, which contracts with HMOs to manage neonatal intensive care in 11 cities.
"That's changing as health plans are looking for every opportunity to improve their cost position and outcomes for their patients," he said.