One of the first issues facing new TeamHealth CEO Leif Murphy is speeding the integration with acquired IPC, a trouble spot for outgoing CEO Mike Snow.
Murphy is leaving his job as CFO at LifePoint Health to take the helm of physician-staffing giant TeamHealth no later than Oct. 1, Team Health CFO David Jones told analysts Wednesday at the Wells Fargo Securities Healthcare Conference in Boston.
Melding the cultures of TeamHealth and IPC has been time-consuming and sometimes difficult, Jones said.
TeamHealth, the nation's largest physician-staffing company with 19,000 physicians, bought IPC in November in a deal valued at $1.6 billion.
Jones said IPC, which specializes in contracting hospitalists or internists to post-acute care facilities, has higher physician turnover and offers a different salary structure than does Team Health. The majority of Team Health's physicians are emergency room physicians, hospitalists and anesthesiologists.
Once fully integrated, IPC will be complementary to TeamHealth, in that TeamHealth's 3,400 hospital and clinical customers are increasingly looking for full-service providers that can handle emergency room and hospitalist duties as well as see patients through to a post-acute setting, Jones said.
Knoxville, Tenn.-based TeamHealth has workflow processes and quality accountability systems that tend to benefit physician groups bought by the company, Jones said.
But TeamHealth is still trying to get its arms around its differences with the way IPC physicians operate and are paid. IPC's physicians are at about 2,000 locations.
For example, Jones said, IPC physicians prior to joining TeamHealth had a smaller percentage of their overall compensation in base salary than did TeamHealth physicians, but they tended to have more of their compensation in bonuses and other performance-based money.
Jones said TeamHealth is trying to bring the two models closer together, in part, to improve physician recruitment at IPC. IPC and hospitalists generally tend to have turnover in the 10-15% range. In contrast, emergency room doctors and anesthesiologist, which represent a good portion of TeamHealth's physician workforce, churn at rates of about 5-6%, he said.
Jones said hospitals have more opportunities to move or return to private practice than ER physicians who often stay at the hospitals where they performed their residencies.
Jones' comments at the Wells Fargo conference were webcast.
The pace of the IPC integration has contributed to TeamHealth's earnings problems.
Though revenue jumped 28% to $1.12 billion in the second quarter vs. a year ago, largely on the IPC acquisition, net income fell to $18.8 million, or 25 cents per share, compared with net income of $28.9 million, or 39 cents, in the year-earlier quarter.
Snow's decision late last year to reject a $5 billion merger offer from rival Amsurg also drew the ire of TeamHealth investors as they watched the company's stock price sink on sagging earnings.
Eventually, the slump drew a big investment in March from hedge fund Jana Partners, which demanded and received three board seats that set the table for the CEO change five months later.
In a note to investors Tuesday, Canaccord Genuity healthcare analyst Richard Close said the arrival of Murphy should be a shot in the arm for investors.
“From an investment standpoint we view the change in leadership as a positive event as it could produce improved investor sentiment following a challenging past 12 months with the IPC acquisition and integration and re-buffing of Amsurg's merger bid,” Close wrote.
