Gaining size and market clout, Doctors Health System has obtained $8 million in new financing and joined forces with Baltimore Medical Systems to care for Medicare and Medicaid HMO patients.
Doctors Health bills itself as Maryland's biggest doctor-owned health system. Baltimore Medical Systems is a community health center organization treating patients at six locations in the city.
They announced yesterday they have formed a third organization, Baltimore Medical Alliance, LLC, which will offer physician and hospital services primarily to Medicare and Medicaid patients in health maintenance organizations.
Doctors Health also announced Friday that it has obtained $8 million in financing from unnamed private investors and is expecting to secure an additional $11 million. The money will fund expansion of the company, in cluding its activities with Baltimore Medical Systems.
The joint venture, Baltimore Medical Alliance, enables the two parent organizations to contract more effectively with Medicare and Medicaid HMOs, a hot growth market.
HMOs are wooing elderly Medicare beneficiaries with the promise of more services and lower out-of-pocket costs than they receive from Medicare alone. The state expects that most Medicaid patients, poor people unable to buy insurance, will belong to HMOs in the future.
Doctors Health and Baltimore Medical Systems say they are in an advantageous position because their doctors see between 45,000 and 50,000 Medicare patients. These patients can join HMOs without having to give up their current doctors, said Dr. Scott Rifkin, an internist who is chairman of Doctors Health.
"We've created the single largest group of Medicare patients in the metropolitan area," he said. "We'll be providing all primary-care services, all specialty services and all hospital services" with exceptions such as mental health care, which HMOs often buy separately.
Teaming up makes good sense for Doctors Health and Baltimore Medical Systems, Dr. Rifkin said.
"We have information systems, capital. They have more case management experience than we have," he said. "They're located in East Baltimore, where we don't have many doctors."
Investors are supplying Doctors Health with $4 million in cash and $4 million in guarantees for loans from NationsBank, Dr. Rifkin says. The company hopes to obtain the additional $11 million from investors in the first three months of 1996.