Illinois medical group looks to make nationwide waves
Acquiring a couple of doctors at a time has resulted in rapid, yet relatively quiet, growth for DuPage Medical Group, which added 140 clinicians this year. The next step is taking the model out-of-state.
In a market where most physicians groups are linked with big hospital systems, independent DuPage Medical Group is an outlier. And its habit of growing via bite-sized acquisitions has allowed it to become a market colossus without making much noise. But that's about to change as the doctor's group maps a plan to expand outside Illinois.
With more than 5,000 employees, 115 locations and $860 million in 2017 revenue, DuPage Medical Group is the largest independent physician group in the Chicago area. It's the third-largest overall, behind Advocate Medical Group and Northwestern Medical Group, according to data compiled by Crain's last year.
Acquiring a couple of doctors at a time has resulted in rapid, yet relatively quiet, growth for the Downers Grove-based company, which added 140 clinicians this year. It has also expanded its services with the opening of a weight loss clinic in Oak Brook and seven physical and occupational therapy clinics.
The next step is taking the model outside Illinois, a move CEO Michael Kasper has teased since August 2017, when the group received a $1.45 billion infusion from Los Angeles-based asset management firm Ares Management. Kasper declines to specify where and when the group will grow—noting only that he's "having active discussions in a few pockets across the country."
DuPage's reach does create challenges around who could potentially sponsor the organization as it grows outside Illinois, Kasper contends. "But the way we've set up the organization is, we can go through multiple recaps in the future, find potential sponsors, use other financing mechanisms to create capital when necessary."
Since starting in Chicago's western suburbs in 1999, the group has expanded into the remainder of the suburban region, most recently the northwestern burbs. The five-year plan involves "robust acquisitions" in the Chicago area, including more immediate care centers, Kasper says. The goal is to "grow the organization to well over 1,000 doctors and complement them with all of the ancillary services to integrate the outpatient delivery model."
The most challenging part about growing the asset-light organization is simply getting doctors—some of whom are used to paper filing systems—to adopt technology like the electronic health record, which drives collaboration as patients are often referred to specialists by primary care doctors. The multispecialty group treats about 2 million patients annually—including Kasper, who recently had surgery to repair a meniscus tear.
DuPage's focus on primary, specialty and immediate care makes it "a bit unusual," says Dr. Joel Shalowitz, who teaches at Northwestern University's Feinberg School of Medicine and Kellogg School of Management. About 44 percent of physicians in multispecialty practices nationwide say their group is owned by a hospital, compared with about 23 percent of physicians in single specialty practices, according to the American Medical Association's 2016 Physician Practice Benchmark Survey.
DuPage has the luxury of sticking to areas that have a relatively attractive payer mix, meaning most patients are covered by Medicare—the federal health insurance program for people 65 and older—or employer-sponsored plans, says Tim Classen, an associate professor of economics at Loyola University Chicago's Quinlan School of Business. A challenge for a lot of providers in the city, he adds, is treating large numbers of patients covered by Medicaid, the health insurance program for the poor and disabled, which reimburses doctors less than Medicare and private insurance for the same services. Treating patients who are unable or unwilling to pay for services, known as uncompensated care, can also be financially taxing for doctors in some areas.
That's not to say the group isn't making a difference in the communities it serves. Kasper says the organization uses data to determine which ZIP codes have the highest emergency department rates when deciding where to open immediate care centers. Such centers "can take on some relatively high-acuity cases that, if we weren't offering the service, would absolutely end up in the (emergency room) and potentially even be admitted to the hospital," he adds.
The organization's outpatient BreakThrough Care Center was also designed to reduce emergency department visits, specifically readmission rates among seniors who previously would have returned to the same environment following an incident.
In the same way DuPage offers patients a different avenue for care, it offers doctors an alternative to growing hospital or insurance employment channels. "What we've tried to become is that private practice destination for doctors who don't want to be in an employment model," Kasper says.
This story first appeared in Crain's Chicago Business.
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