St. Francis looks to future

Topeka Capital-Journal, The, Jan 12, 2008 by Michael Hooper

By Michael Hooper

THE CAPITAL-JOURNAL

St. Francis Health Center is acquiring physician practices to secure its position in the marketplace before opening a health park in west Topeka.

Since May 2006, the hospital has added nine operations with 20 professional staff members to its portfolio of services.

Mike Schrader, president and chief executive officer of St. Francis, said the hospital needed to increase its primary physician base in response to community needs and to prepare for the move to a new hospital it will build on the former Menninger campus.

Last year, St. Francis acquired 132 acres at the former Menninger campus near S.W. 6th and Wanamaker Road.

"We are trying to enhance our primary-care base," Schrader said. "We needed to do it anyway. As we look at opportunities to develop ambulatory services at the hill, we need to make sure we have the physicians to offer those services and be in those offices."

St. Francis plans to begin demolition this year of the former Menninger buildings, except the clock tower and the Theron Sims law office building, Schrader said.

"We are in the process of sending a contract out for demolition," Schrader said Thursday.

St. Francis intends to submit a plan later this year to city planners to begin the approval process.

"We're at a minimum of 18 months from putting a shovel in the ground," Schrader said.

Doctors, hospitals

St. Francis' acquisition of physician practices includes Neurosurgical Associates at 634 S.W. Mulvane on Jan. 1. Dr. John Ebeling and Dr. David Fritz and six staff members joined St. Francis.

Schrader said Ebeling and Fritz represent the oldest and best neurological practice in Topeka. They are a good fit with the hospital's Spine Center, which they already have been supporting.

In September, St. Francis acquired the primary care service of Kansas Medical Clinic, including its offices at Hunter's Ridge in North Topeka and in the Tallgrass Surgical Center building near St. Francis' future health park.

Dr. Shekhar Challa, president of Kansas Medical Clinic, said the clinic wanted to sell its primary-care operations to St. Francis so Kansas Medical Clinic can focus on specialty services, such as gastroenterology, neurology, pathology and dermatology.

Challa said under Schrader, St. Francis has a vision of moving to the health park.

"It was clear they needed to secure their market share," Challa said. "It was ideal timing for them and for us because we wanted to focus on speciality care. That's what we do best. It was a win- win."

Some doctors prefer to be independent practitioners and run their own operations. But others don't want the hassles associated with medical billing, buying malpractice insurance and handling payroll.

"We provide it," Schrader said. "They no longer have to shop for malpractice insurance. We provide the back office support. We free them up to pay attention to what they want to pay attention to, and that is their patients."

Challa said Kansas Medical Mutual Insurance Co., a member-owned insurance company, has done a good job with medical malpractice insurance rates in Kansas because of its unwillingness to settle frivolous lawsuits.

But Challa agreed it is a growing challenge for doctors to run their own independent practices.

Dr. Jeffrey Rhoads closed his practice in October and transferred to an Overland Park hospital after operating in Topeka for two decades. He had more than 4,500 patients but had financial problems.

"He was the busiest doctor in town," Challa said.

Stormont-Vail HealthCare has a history of increasing its physician base dating to 1985 when it acquired the Osage Medical Clinic in Osage City, founded by Dr. Paul Adams and Dr. Dwight Adams. Dr. James Seeman joined the practice before their retirement and has been joined by Dr. Carrie A. Hagemann, said Nancy Burkhardt, spokeswoman for Stormont-Vail HealthCare.

When Cotton-O'Neil Clinic joined Stormont-Vail in 1995, the two entities identified cardiology as an area needing additional staff, Burkhardt said. The number of cardiologists grew from six to 14.

"This is in line with our mission statement, which is 'Working together to improve the health of our community,' " Burkhardt said.

Stormont-Vail's physician base has grown from 100 in 1997 to 170.

St. Francis is playing catch-up. St. Francis has 41 physicians on staff, a number that Schrader would like to see higher.

"That number will grow," he said. "Exactly how high? I don't know. Employment will go up, but we want to see the number of affiliated physicians grow."

St. Francis declined to release the amount of money it is paying for physician practices, but Schrader said doctors weren't getting windfalls.

Schrader said the hospital purchased hard assets, such as equipment, desks, chairs and computers, which aren't worth much. The value of each practice is in its clinical staff.

Ten years ago, Challa said, Columbia/HCA went on a buying spree, paying huge sums for hospitals and doctor practices. Now investors aren't paying that much, he said.

Schrader said when the hospital is interested in buying a practice, an independent appraiser is hired. Negotiations for the purchase price start with the appraiser's number.