Tenet Healthcare Corp.'s pending acquisition of physician practices and hospitals from Allegheny Health, Education and Research Foundation is sending shock waves through the Philadelphia physician market.
Tenet recently offered contracts to 225 of the more than 300 Philadelphia-area physicians in the AHERF network. Fifty-one doctors were terminated Oct. 18 and given two weeks' severance pay. Tenet would not comment on why those 51 contracts won't be renewed. Additional terminations are expected at the medical school.
It is not yet clear whether Tenet will send contracts to the approximately 40 other physicians in the network, who practice in New Jersey.
Tenet spokesman Lance Ignon says he doesn't expect all 225 physicians to return their contracts.
"Everybody's scared," says Bucks County orthopedic surgeon and Allegheny University faculty member Christopher Aland, M.D. According to Aland, many physicians are wary of working for a large, for-profit entity. "Some of the bigger groups are comfortable and are going to stay," he says. "Some of the smaller ones are consolidating themselves into other groups that can exist independently. Nobody really knows what's going on, and unfortunately nobody has the answers."
Pittsburgh-based AHERF put the physician practices, eight Philadelphia hospitals and Allegheny University of the Health Sciences on the block after filing for bankruptcy protection this summer. Tenet recently submitted the winning $345 million bid to acquire the practices, hospitals and university, but the Santa Barbara, Calif.-based hospital chain's offer is contingent on securing a partner to manage the medical school. Ignon says Tenet is seeking an academic partner because the company has no experience managing academic health centers. (Its original partner, Drexel University, bowed out last month.) Ignon says Tenet hopes to find a partner by early this month.
Aland became an AHERF employee about two years ago when he accepted a faculty position. He says he desired the security of a large system and thought it would provide a steady referral stream for his orthopedic practice. AHERF acquired many primary-care practices but often hired specialists as faculty without purchasing the assets of their practice.
"They didn't buy my practice and didn't buy my patients. I didn't get a big chunk of change, and now in some ways that's good for me at the end," he says.
Aland says he received a tentative letter of nonreappointment from AHERF last month, but he has not yet heard from Tenet.
"I don't want to stay, and I've been waiting to be told I don't have to stay," he says.
AHERF had been on a physician practice acquisition spree in recent years, but the cost and low productivity of those acquisitions contributed to the health system's $1.3 billion debt. Aland says AHERF's corporate bureaucracy has left a bad taste in the mouths of many physicians and some -- including himself -- would prefer to be independent practitioners instead of employees of a giant health system.
According to Ignon, physicians who are offered contracts can choose to remain Tenet-employed physicians, set up their own practices and hire the company to manage them, or become independent practitioners. Once the acquisition is completed, current contracts will be valid for another 120 days.
"We want to give them time to evaluate their options and make a choice they feel comfortable with. We're going to try to do our best to maintain relations with them, even if they choose not to be employees," he says. "We are asking everyone to bear with us."