Doctors group defects from rival, rejoins Beth Israel

After two years, group leaves Steward Health Care System

Kevin Tabb, Beth Israel Deaconess’s chief executive, said the goal is to ensure patients be seen at their local doctor’s office.Jonathan Wiggs/Globe Staff/File

The bruising competition among the state’s large hospital systems took an unusual turn Monday when a large doctors group in Newburyport defected back to Beth Israel Deaconess Medical Center just two years after jumping to rival Steward Health Care System.

The decision by the 200-doctor Whittier
Independent Practice Association highlights the competition among medical networks to win the hearts and wallets of the gatekeepers who decide which hospitals will receive their patients who need more intensive care.

With health care reform exerting greater pressure on institutions to keep costs down, Beth Israel Deaconess, Steward, and other major hospital networks are all trying to find ways to keep their beds filled as often as possible to compensate for lower payments or lost business.

“You don’t have to be a rocket scientist to realize bricks and mortar don’t refer patients, doctors refer patients,” said Ellen Lutch Bender, president of Bender Strategies, a health care consulting firm in Newton. “All major health care organizations need to try hard to develop more close relationships with physician groups.”

Since its formation by a private equity group in 2010, the for-profit Steward has expanded to include 11 hospitals in Massachusetts and also has moved aggressively to attract independent physicians to its network.

It’s unclear why the Newburyport doctors decided to leave Steward and return to the fold with Beth Israel Deaconess so soon after signing with Steward, in November 2011, although one reason may be the role the local medical center in Newburyport, Anna Jaques Hospital, would have played in the new network.

At the time, the Whittier physicians appeared to have originally been lured to Steward by a promise of lucrative incentives estimated at around $3 million. But the Steward agreement also allowed Whittier doctors to continue to refer patients to Anna Jaques, an independent hospital.

However, Anna Jaques officials said they later tried to work out a separate deal between the hospital and Steward, but were unsuccessful.

Under the terms of the new deal, Beth Israel Deaconess, Anna Jaques, and the Whittier doctors will effectively share the financial risk of caring for patients. In such an arrangement, doctors have a deal with the local hospital for routine care and can send more complex cases to Beth Israel.

“This is a very fluid time in regards to business relationships across the health care system,” said Leonard Marcus, a lecturer on public health policy at Harvard University.

The major driver of such agreements are changes to the health care payment system in which medical providers receive a single amount to care for a patient’s entire needs rather than fees for individual tests and services. In that environment, doctors and community hospitals that want to remain independent see looser affiliations with a big medical center as a way to spread the economic risk of such a single-payment system. Beth Israel Deaconess has about 2,300 doctors throughout its system, including the newly returned physicians from Whittier.

“It’s gratifying that there’s a reconciliation now, 2½ years later, that we are offering a compelling model that they would like to be part of,” said Beth Israel Deaconess’s chief executive, Kevin Tabb.

The goal of the new deal, Tabb added, is not to funnel patients from the far North Shore into Boston, but rather to ensure they continue to be seen at their local doctor’s office or at the 123-bed Anna Jaques for most care.

In a statement, Whittier group’s president, Dr. Kevin Lanphear, said that with the agreement the doctors “will be able to continue to enhance our clinical integration while sharing in the risks and rewards.” He would not elaborate.

The new agreement is a blow to the upstart Steward system, which has been aggressively expanding its medical footprint in Massachusetts.

Steward acknowledged the defection of the Whittier doctors Monday, but said it was talking with some of the physicians at the practice who had an interest in maintaining their affiliation with its hospitals. The company has two hospitals farther up the Merrimack Valley in Haverhill and Methuen.

“We have a positive, historic relationship with Whittier and many of their physicians share our interest in providing high quality care in the community instead of referring patients to Boston academic teaching centers,” Steward said in a statement.

However, Steward did dispute that it provided a major financial incentive in 2011 to attract the Whittier group, though it would not provide any details of the arrangement.

Anna Jaques executives had recently reached out to several large medical centers — including Steward — in search of an affiliation before reaching an agreement with Beth Israel Deaconess.

“We were not able to come up with a reasonable risk-sharing model with Steward Health Care,” said Delia O’Connor, the chief executive of Anna Jaques Hospital. “We just didn’t fit.”

Anna Jaques and Steward are organized differently. Anna Jaques was committed to remaining an independent hospital. Steward’s business is built around a group of hospitals it owns directly, a structure intended to control all aspects of their operations.

In contrast, Beth Israel Deaconess Care Organization both owns hospitals and has affiliations with others that remain independent medical centers.