Doctors Inc.

• Author: Sturgeon, Julie
• Position: Physician networks in Indiana

Indiana physician groups find strength in numbers.

Most Hoosiers don't have a clue as to what's happening behind the scenes in health care, and doctors prefer it that way. Few physicians stand alone in their practices these days, but the medical profession strives to lessen the impact of mergers, acquisitions and partnerships on the general public's experiences at the doctor's office.

"Most people have no idea the extent of change happening now and its future implications," says Teresa Roberts, executive director of the South Bend Clinic in St. Joseph County. "We know change is coming, but we want to see it develop in the right way."

For example, the 80-year-old South Bend Clinic recently celebrated its first anniversary as a partner with PhyCor, a national physician-practice management company that bought the clinic's assets in late 1995. Likewise, thousands of similar companies and services have sprung up overnight to help Midwest doctors cope with the changes.

The University of Notre Dame's graduate school now offers a certificate in medical practice management. "In the past, the business manager of a physician's office was most likely a nurse, spouse or secretary who worked her way up to a management position," says executive-in-residence Jeff Bernel. "Now there is a need to train these managers with up-to-date business knowledge and tools. Medical practices truly have become real businesses - they must to survive economically."

"Consultants to the health-care scene are running out your ears," echoes Thomas Neal, a partner at Krieg Devault Alexander & Capehart in Indianapolis. "If docs have the cash to initiate the services, they can become just as sophisticated in the market as a big national insurance company." The law firm itself devotes five full-time and five part-time lawyers to health-care management; Neal concentrates exclusively on physician networks and acquisition/merger contracts.

Doctors control as much as 85 percent of all health-care dollars spent in this country, according to industry experts. "The name of the game for linked physicians is to offer medical services smarter and cheaper," Neal says. By negotiating contracts with employers directly, developing protocols for managing expensive diseases and emphasizing the importance of getting the diagnosis right the first time, the overhead doesn't rise - and neither do patients' bills.

"Let's face it - we're really not talking about cost containment these days. We're talking about the redistribution of the health-care dollar," says Dr. William Nasser, the founder of both Nasser Smith & Pinkerton Cardiology group in Indianapolis and Gateway physician network throughout the state.

To prove his point, he notes that health-care expenditures in 1996 were approximately $1.1 trillion and are expected to be in excess of $2 trillion within five years. "Now if the physicians and hospitals are getting less reimbursement, where is that money going?" Nasser asks. "Our incomes will decrease; we've accepted that. But we can't lose our autonomy. That's what we're fighting for."

Take, for instance, the case of the South Bend Clinic. Founder Walter Baker and six colleagues established a multispecialty clinic in 1916 patterned after the Mayo Clinic in Rochester, Minn. This was decades before it was popular to band together for economic reasons. In fact, that wasn't the driving force behind this radical operation at all. On opening day, the clinic boasted a laboratory, medical library and an outpatient surgery center because "Dr...