Largest Md. health care network began with dinner in Little Italy

May 26, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

What began over dinner in Little Italy more than a year ago between two hospital presidents culminated yesterday in the announced alliance of four Maryland hospitals, creating the state's largest health care network.

The men at the table, Robert P. Kowal of the Greater Baltimore Medical Center, and Robert E. Pezzoli of St. Agnes Hospital, were both outsiders who came to Maryland in the 1980s seasoned by the wins and losses in hotly competitive, unregulated markets.

Initially, the two men, both with histories of creativity and daring, had found it difficult to work within the pricing constraints of the regulatory system here. But they soon adapted, using their experience elsewhere in the managed-care industry to change things.

Although they had similar philosophies about how things should work -- and had even drawn up similar pictures of what a health care delivery system in Maryland might look like -- they didn't meet until a Massachusetts consultant hired by each of them suggested they talk.

"She said, 'You and Bob ought to get together," recalled Mr. Pezzoli, who began developing models of a health care system in February 1993. At the first dinner, he said, "it turned out Bob was doing a very similar thing in his organization."

Not only did they come from similar cultures, but they had a personal chemistry that clicked. "We're both Type A personalities," Mr. Kowal said.

The four-hospital alliance that resulted from their discussions would position the hospitals inside a network that includes an array of health care services to be offered for a single price to insurance companies.

The two other hospitals -- Holy Cross in Silver Spring, also an aggressive player in managed care on the fringes of Washington, and Northwest Hospital Center, a smaller but modern community hospital -- were approached by the executives and joined the network last fall.

At a news conference held yesterday to announce the network, Maryland Hospital Association President Cal Pierson called the alliance the beginning of a restructuring of health care in Maryland.

For these hospitals, however, change has been in the works for years, with the result that one, St. Agnes, has taken a lead role in introducing hospitals to managed care in Maryland.

Mr. Pezzoli, 45, was hired seven years ago as chief executive of a St. Agnes in serious financial trouble and losing patients to nearby competitors. Today, St. Agnes is one of the most profitable hospitals in the state, earning enough to pay for a new $20 million building in cash.

He headed a public teaching hospital in Indianapolis and, as early as 1986, was involved in organizing doctors and pilot programs to treat managed-care patients for a set fee.

A man with a forthright, down-to-earth manner, Mr. Pezzoli quickly established trust with the medical staff, and doctors said they were enormously encouraged by the way he approached the process.

Nearly four years ago, he helped organize St. Agnes' doctors into one of the area's first physician-hospital organizations, a company that could discount doctor services and bid for contracts with managed care companies, primarily health-maintenance organizations.

St. Agnes then bought an unregulated competitor -- a surgery center in Ellicott City -- so it could offer discounts on surgery to insurance companies. "He was very foresighted," said Carl Mech, a thoracic surgeon at St. Agnes and head of its physician-hospital group.

Mr. Kowal, 52, too, brought modern business methods to his hospital.

He was president of a suburban hospital center in Chicago before he was recruited to Baltimore 10 years ago.

"The whole hospital is totally changed, everything about it is new," said John Somerville, a lawyer with Whiteford Taylor who serves on GBMC's board. Before Mr. Kowal came, he said, GBMC had talked for years about opening doctors' offices on the hospital campus as a way of bringing in patients. Now GBMC has three physician offices in use and a hospice on the drawing board.

Also on Mr. Kowal's watch, the hospital opened at least a half-dozen for-profit businesses that will be an integral part of the new network.

Even without organizing doctors as St. Agnes did, GBMC has proven attractive to managed-care companies. Six years ago, Kaiser Permanente signed exclusive contracts for its patients to be treated at GBMC and Holy Cross.

Mr. Kowal's sometimes abrupt manner, combined with his determination to carry out what some regarded as a grand vision, led to a rocky start with doctors.

"At the beginning, it was not easy. There was a period of tension between management and the medical staff, and that was one of the things we tried to work on in the next four to five years," said Michael Yagy, partner in the law firm of Piper & Marbury and chairman of GBMC.

Over the years, doctors have tempered their criticism of Mr. Kowal's style, and now some are approaching him to ask what else he can do.

"In my opinion, Kowal and other hospital leaders have been about the business for some years of doing what needs to be done, that is, they are running the hospital like a business," said Michael T. Scheerer, an orthopedic surgeon.

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