An intrepid group of 20 Oklahoma doctors plans to break ground this fall on its own 42-bed hospital, undaunted by the failure of previous physician efforts to control more of their local healthcare delivery systems.
The group of physicians intends to open the $24 million hospital next summer in Moore, Okla., a burgeoning community of more than 50,000 about 10 miles from downtown Oklahoma City, which surrounds Moore on three sides.
The move, unveiled last week, comes despite a history of unsuccessful efforts by physicians to own their own hospitals or managed-care plans.
In Denver, for example, 95 physicians opened a 35-bed hospital, Precedent Health Center, in 1998 to compete with a hospital owned by Columbia/HCA Healthcare Corp. Precedent filed for bankruptcy after just 14 months of operation (July 12, 1999, p. 22).
But that and other failures haven't stopped some physicians from trying.
In Idaho Falls, 85 physicians want to take on the dominant Columbia facility with their 30-bed, $24 million Idaho Falls Community Hospital, expected to open in early 2001 (Jan. 24, p. 18).
"Can they stay the course is the question," said Dean Coddington, a principal in the Denver office of McManis Associates, a healthcare consulting firm. "I think physicians can get real nervous real fast, particularly when they have their own money invested. It's an uphill battle, but I wouldn't say it can't work."
The Oklahoma doctors believe they can make it work because the demographics of Moore are in their favor.
Moore is a relatively young, growing community with many families, said John Resneder, M.D., a spokesman for the physician group. His colleague, family practitioner James Kimball, M.D., added that the hospital is designed to meet 95% of the population's medical needs, such as obstetrics and gynecology, pediatrics and routine surgeries.
Those patients requiring the more serious services of cardiologists, oncologists and neurosurgeons would be referred to nearby tertiary facilities, the doctors said.
The closest tertiary hospitals are 141-bed Hillcrest Health Center and 302-bed Integris Southwest Medical Center, both in Oklahoma City.
But the provision of primary-care services isn't how most hospitals make money, Coddington said.
"A primary-care hospital is a tough go," he said. "The bigger money is in heart surgeries and some of those things that you usually need to subsidize primary care."
He added that the payer mix plays a major role in whether this type of facility can succeed.
"If they stay away from a lot of the Medicare/Medicaid population and stay away from discounted and free care, maybe they have a shot at it," Coddington said.
The Moore market deserves and can support its own hospital, said Michael Schuster, president of the Schuster Group, a healthcare development company in Oklahoma City that's working with the physicians.
The Schuster Group is putting up part of the money for the hospital, including the real estate and equipment. The doctors are putting up an undisclosed amount for start-up operating costs and construction.
Schuster said Moore is the most privately insured city in the state, with a nearly $50,000 per-capita family income. The percentage of Medicare patients is very small, he said, and Medicaid is even smaller. He foresees little problem obtaining managed-care contracts, as most of the physicians are already signed up with major PPOs and HMOs.
"We offer services at prices the market is willing to pay," Schuster said, adding that he is working closely with local businesses to attract their employees.
The 106,000-square-foot, for-profit hospital will be built adjacent to the existing Moore Medical Office Building, where some of the physicians have their offices.
The hospital will house emergency and diagnostic services, a women's center with 12 specialty birthing suites, three surgical suites and 30 inpatient beds.