A group of 11 physicians that has worked at Lawrence & Memorial Hospital in New London, Conn., for more than two decades is setting up shop on its own, possibly costing the hospital millions of dollars.
Ocean Radiology has worked under an exclusive contract, performing nearly all 160,000 X-ray, CT-scan, MRI, ultrasound and radiology procedures that are done at the hospital each year.
The group's services are used by nearly every physician in the region, said Mithlesh Govil, M.D., the elected leader of the L&M medical staff.
Kathleen Kurowski, M.D., a surgeon, said the move is a "huge disruption."
The radiologists had hoped to continue providing services in a partnership with the hospital after opening a new outpatient imaging center, but the two parties could not agree on terms. According to hospital administrators, Ocean Radiology could take with it $18 million in revenue from the hospital in its first five years of operation.
In total, imaging services at the hospital from walk-in patients and those admitted to the hospital generate $35 million of total annual revenues of $220 million.
The hospital is a nonprofit institution and operates at a slim profit margin. Income exceeded expenses by about 1% in fiscal 2003, the last year for which data is available.
Nationally, financial pressures ranging from medical malpractice insurance and declining insurance reimbursements to rising competition are spurring doctors and hospitals to seek new sources of revenue and guard existing sources.
Consumer demands for easier access, convenience and choices for medical services also are driving competition.
"Everybody is having difficulty with the revolutionary changes in the delivery of health care," said George Sprecace, M.D., who began his allergy and immunology practice 42 years ago. "The hospital and the physicians had better figure out a way to cope together. The pressures are understandable, but the conflicts have not been handled as well as they could be."
Robert Goldberg, M.D., an internist, said economics are driving most of the trouble.
"If there wasn't so much pressure for that dollar, people would be more willing to make some compromises," he said. "But now, losing $10 makes a difference."
Lawrence & Memorial and the radiology group negotiated 18 months over a partnership agreement for the outpatient imaging services in a new, $7 million facility being built in Waterford.
The hospital has announced it will sever ties this August, and is soliciting proposals for another group to replace Ocean Radiology.