Physicians employed by the Allegheny Health, Education and Research Foundation hailed last week's pending buyout by Tenet Healthcare Corp., but their relief was tempered by the news the new owner won't renew their cushy contracts.
Tenet said most of the approximately 1,800 physicians will not continue as employees when it takes over Oct. 21. Instead, Tenet said, it will assist physicians in establishing their own practices.
Because AHERF is in bankruptcy, Tenet does not have to honor the physicians' employment contracts.
"Tenet prides itself on excellent physician relationships," said Lee Domanico, who was named senior vice president of Tenet's newly established Pennsylvania region last week. "We hope over time we can earn their confidence and respect and hopefully get them to choose our hospitals-because they do have a choice."
Given AHERF's rapidly declining patient volume, it's in Tenet's interest to maintain physician loyalty. But it's unclear to what extent the company will go to make that happen.
Tenet spokesman Harry Anderson said the company was "looking for a solution that would make doctors want to practice at and refer patients to these hospitals."
Tenet said it might renegotiate some contracts, and by late last week some physicians had received draft agreements. But the company said it will emphasize affiliation over direct employment.
AHERF, like other Philadelphia-area systems, has been losing money on physician practices. "I think Tenet did not want to be saddled with agreements that Allegheny had made with physicians. Some of (the agreements) were pretty rich," said attorney Julia Gabis, who practices in West Conshohocken, Pa., and represents some of AHERF's physicians.
Faculty physicians, who make up the majority, will be encouraged to create a faculty practice plan independent of the hospital system, with some percentage of the plan's income used to support the university, according to attorneys representing the physicians.
"What appears to be happening is each specialty department is being asked to spin off its own billing entity," Gabis said.
Things are less clear for about 300 primary-care physicians, who are faced with the choice of establishing a private practice or, if possible, finding employment at another system.
A few desirable practices have snagged deals with other hospital systems, but in general Philadelphia's hospitals have become extremely selective about making offers.
Some primary-care doctors may earn more on their own anyway. "If they work hard and bill more efficiently, I think they may do as well if not better in the long run," said attorney Bill Kalogredis of Kalogredis, Tsoules and Sweeney in Wayne, Pa.
Yet attorney Mark Kropiewnicki of the Health Care Group in Plymouth Meeting, Pa., worries that his physician clients will feel "stampeded" into rash decisions because of the short time before Tenet takes over Oct. 21. "I'm hoping Tenet is going to try to do right by them and not use their leverage to the nth degree," he said.
-With Scott Hensley