Fairfield Ledger
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Neighbors Growing Together | Sep 18, 2014

Health center to purchase medical clinic

By VICKI TILLIS | Apr 29, 2014

The Jefferson County Health Center Board of Trustees approved the health center’s purchase of the Medical Arts Clinic during the board’s monthly meeting Monday evening.

Health center administrator and CEO Deb Cardin reminded the trustees she has been in various stages of discussion on the topic with both the physician clinics, Medical Arts Clinic and Fairfield Clinic PC, since last year.

“We are now at a point where we need to decide if [Jefferson County Health Center] should acquire Medical Arts Clinic,” she said.

“Some of the benefits we should gain from an acquisition is the ability to improve quality through better clinical integration and care coordination,” Cardin said. “Additionally, the newer care models under health reform require closer collaboration between hospitals and physicians, so this should make it easier to achieve when our physicians’ practices are more closely integrated with us.

“Nonetheless, I believe the most important reason we should seriously consider this transaction is the necessity to retain our present physicians for this community and the ability to recruit new ones as the need arises,” she continued.

“The era of independent private practice is drawing to a close because it is a very difficult time to be a physician,” Cardin told the trustees. “Physicians are facing stagnant or reduced reimbursement, burdensome regulations that make it more and more difficult to run a practice, high malpractice insurance premiums, the need to navigate complex changes in insurance and delivery systems under health reform and the implementation of costly, yet increasingly necessary health information technology. The pressures physicians face are similar to some of the same things hospitals are going through. So we can succeed together or fail separately.”

Cardin said the pressures physicians are facing is not a unique situation to the local clinics, but a nationwide trend.

Derek Anderson, a family practice physician at Medical Arts Clinic, told the trustees the clinic partners feel this is the best way to move forward. He added if the health center were not such a well-run facility, the clinic partners would not be considering the sale.

In a written statement, Donal Hill, also a family practice physician at the clinic, told the trustees: “The trust, lack of role conflict, effectiveness of communication we have had with our local hospital will be a win-win situation for our patients and community.

“Our patients should not be concerned if our relationship will change our practice. Our agreement will better enable our ability to maintain and improve our offering of services and quality of care for our deserving local citizens,” Hill concluded.

Medical Arts Clinic partners sought an appraisal from Acclaro Valuation Advisors, and then requested the health center consider buying the clinic.

Cardin said the health center’s attorney, with input from another valuation firm, reviewed the valuation. Members of the health center’s finance committee also reviewed the valuation.

The valuation established the fair market value of a 100 percent ownership interest in the assets of the clinic for a proposed transaction with the health center. The valuation complies with the rules and regulations of the IRS and federal Stark Law. The Stark Regulations are the authoritative guidance for the valuation of medical practices. The valuation was completed from interviews with management, research of economic and industry conditions, analysis and review of Medical Arts’s financial statements and other procedures to obtain an understanding of the clinics business and operating environment, financial condition, operating results, cash flow and risk associated with an investment in the clinic.

Cardin told the trustees they wouldn’t have a purchase price until the sales closing because some factors, like vacation liabilities of clinic employees, will need to be subtracted.

An Aug. 1 closing date is planned because “there is a lot of transitioning to do: coding, billing, staff, electronic records, credentialing the physicians under the health center,” said Cardin.

“I’ve heard discussions in the last 15, 18 years that doctors don’t want brick and mortar,” said trustee Bob Keller. “It’s not the way they do things these days. I feel [the purchase] gives a competitive edge to bring in new doctors.”

“It’s a step forward for us,” agreed board president Renee Rebling.

The trustees approved the health center’s purchase of the Medical Arts Clinic, contingent on the health center’s attorney and valuation advisors approval of the purchase agreement.

“As far as the physicians of Fairfield Clinic, they also have voiced to me their desire to sell their medical practice to the hospital,” Cardin told the trustees. “They are beginning the process of obtaining an appraisal of their practice, too.”

Cardin said the Acclaro Valuation Advisors are completing the valuation to assure fairness to the two clinics.

 

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