August 23, 1996

Midsouth deal links VUMC, 254 physicians

Midsouth deal links VUMC, 254 physicians

Vanderbilt University Medical Center has strengthened its commitment of providing high quality health care throughout the region by affiliating with Nashville-based Midsouth Independent Practice Association Inc.

The agreement gives VUMC a partnership with Midsouth's 254 primary care and specialist physicians in counties surrounding Nashville, said Dr. James K. Geraughty, associate vice chancellor for Health Affairs.

"It ensures that patients and physicians in these communities will continue to have access to Vanderbilt's broad range of health care services."

Financial terms of the 10-year agreement were not disclosed. Under terms of the affiliation agreement, VUMC and Midsouth will consult and negotiate on future managed care agreements.

Formed in 1994, Midsouth includes physicians from Davidson and Williamson counties, Cookeville, Madison and other areas across Middle Tennessee.

The association has already proven its ability to obtain managed care agreements and operate within capitated budgets established by health plans and employers.

By combining their unique resources and expertise, Midsouth and VUMC are making a commitment to the health care process inherent to managed care.

"This agreement gives our physicians access to a broader base of sub-specialists and it gives us the ability to offer Vanderbilt as a cost-effective option for the health plans, employers and patients in our communities," said Midsouth manager Susan Sharpe.

"It also involves some joint marketing, and it certainly helps to bring Vanderbilt to the table."

The agreement also marks a huge departure in the way business is usually done in this age of managed care and could become a model for other academic health care centers across the country to remain vibrant in an uncertain health care market, Geraughty said.

Historically, hospitals would purchase physician practice groups and associations outright, not affiliate with them. By executing this agreement with Midsouth, VUMC avoided that cost, Geraughty said.

"Over the past few years, it has become common practice for hospitals to pay huge sums of money to get physicians on their team. This agreement allows us to formalize our physician partnerships without having to purchase their practices," he said.

"It's another way of doing business that is much more cost-effective, and, to my knowledge, it's the first agreement of its kind. We were not able to find a model of this anywhere in the country.

"It also strengthens our presence in outlying counties while not threatening their physicians because there is a partnership between these physicians and their communities. After all, health care delivery is local and physicians should maintain control of health care in their communities," Geraughty said.

But beyond a hospital/practice association alliance, this agreement carries within it a strong education component, that, Geraughty said, will provide training for students and physicians in the emerging business of health care. With the growth of managed care there is a need for more primary care physicians, and this new relationship with Midsouth will go a long way toward complementing VUMC's primary care training programs.

"We are going to need community sites to train residents in the emerging business of health care. This affiliation will help do that," Geraughty said. "I can foresee a time when Vanderbilt will train physicians in places like Cookeville, Franklin, Brentwood and Madison."

This type of affiliation with a large, independent physician practice association was made possible by Vanderbilt's status as a premier health care center that focuses on patient care, research and education, Geraughty said.

"As a non-profit academic health care center we can provide a wide range of services that other institutions in the region can't, such as The Vanderbilt Clinic, Vanderbilt Children's Hospital, the Vanderbilt Diabetes Center, the Level IV Trauma Center, the Vanderbilt Cancer Center and the Voice Center at Vanderbilt.

"What we do here, in terms of academic research and education, complements what the physicians in Midsouth are already providing in their communities. It would be difficult for any other system to duplicate this type of agreement because they couldn't bring to the table what Vanderbilt brings.

"And most importantly, the communities and the patients involved will benefit from access to Vanderbilt and its services," Geraughty said.