United Physicians, one of the largest independent physician groups in Michigan, sued Beaumont Health on Thursday to dissolve its partnership in Beaumont Care Partners, a clinically integrated network formed by the two former allies.
In April, UP was terminated from Beaumont Care Partners for failure to pay capital payments the past two years, an allegation that UP acknowledges but was prepared to pay, UP officials told Crain's in May. BCP is composed of Beaumont's eight hospitals and includes 4,300 doctors either by employment or volunteer affliation.
Officials for United Physicians did not respond for comment on the lawsuit, filed in Oakland County Circuit Court before Judge James Alexander.
"Beaumont Health and United Physicians have philosophical and business differences regarding the future of healthcare," the health system said in a statement. "We value our relationships with all of our physicians. While we cannot comment on pending litigation, we will continue to deliver the compassionate, extraordinary care that our patients expect from Beaumont."
Dr. Mike Williams, United's president, told Crain's in May the move to terminate UP was done by surprise and was unnecessary. He said the other three founding organizations, Beaumont Health, and Beaumont Accountable Care Organization, formerly Oakwood ACO, voted to dismiss UP from four-year-old BCP without any discussion.
"This action appears to be premised upon the pretext of UP withholding capital investment payments. Nonetheless, the actions of Beaumont Health and (Beaumont ACO) were not authorized by BCP's operating agreement or Michigan law," Williams said in an email Thursday to UP doctors.
In the letter, Williams said the lawsuit is necessary because Michigan law requires a lawsuit to be filed to dissolve an entity like BCP.
"While UP does not relish having to sue Beaumont Health and (Beaumont ACO), it has a fiduciary responsibility to act in the best interests of its physician shareholders," Williams said. "The UP board and management team worked hard to find other solutions, but the actions of Beaumont Health and Beaumont ACO left no other choice than to trigger the mechanism authorized by Michigan law.
"While we are disappointed that the BCP partnership did not work out, UP remains committed to the success of its member physicians," Williams said.
Over the past several months, UP has moved forward working on partnerships with other health systems, physician groups and health plans, Williams said.
UP has signed a contract with Henry Ford Physician Network, another clinically integrated network, to participate in managed care contracts. The first one announced is ConnectedCare, a direct employer deal between General Motors Co. and Henry Ford.
UP also has created a joint venture partnership with Oakland Southfield Physicians and contracted with Health Alliance Plan of Michigan for a Medicare Advantage primary care product.
BCP's first contract is with Beaumont Health's employee health plan.
The background
Beaumont executives have told Crain's that a number of independent and employed doctors expressed concern that UP stopped contributing capital to BCP in 2017 and didn't respond immediately to a February invoice for a $400,000 payment.
Beaumont officials also told Crain's that UP also failed to comply and worked to stymie decisions made by the clinically integrated network to create the necessary management infrastructure to contract with payers and employers.
But Williams said UP's board had become increasingly concerned that Beaumont's new management team was changing BCP's operating agreement that all parties agreed to in 2016 when BCP was formed.
Problems between UP and Beaumont began in mid-2017, when Beaumont signed a narrow network contract with Priority Health without consulting with UP. This year, Beaumont signed a second narrow network contract with UnitedHealthcare.
Williams has said he believes the true reason for UP's dismissal is Beaumont's effort to gain control of BCP and exercise contracting authority over independent physicians. He cited Beaumont Health's decision to launch 30 new Urgent Care Clinics in Southeast Michigan thereby directly competing with established primary care practices in our community. Last August, Beaumont signed a deal to develop the 30 new urgent care centers with WellStreet Urgent Care of Atlanta.
As a clinically integrated network, BCP was designed to conduct joint hospital-physician managed care contracting with payers and large employers.
Last month, one of the three CINs in Michigan folded. Together Health Network, a partnership between the University of Michigan and the state's two Catholic systems, Trinity Health Michigan and Ascension Health Michigan, closed shop as doctors complained they were not reaping any financial benefits from the partnership.
Affirmant Health Partners, which includes Henry Ford Health System and Sparrow Health System, and Beaumont Care Partners are in operation. Nationally, more than 500 clinically integrated networks exist.
"United Physicians sues Beaumont over partnership breakup" originally appeared in Crain's Detroit Business.
