70 doctors create Flagship network Many are affiliated with Hopkins but will compete for contracts

March 28, 1996|By M. William Salganik | M. William Salganik,SUN STAFF

More than a dozen medical groups, most with a strong Hopkins flavor, announced yesterday that they are merging to form Flagship Health.

With 70 physicians, including well-known practices in internal medicine, pediatrics and various specialties, Flagship adds another player to a health marketplace where a variety of organizations are rushing to sign up physicians and compete for managed care contracts.

Dr. Dana Frank, an internist with offices in Hopkins' Green Spring Station facility, is chairman of the board and chief executive officer of Flagship. The president and chief operating officer is James M. Anders Jr. -- also chief operating officer of the Kennedy Krieger Institute, which treats children with neurological disorders. Dr. Frank said Flagship would "lease" business expertise from Kennedy Krieger on a consulting basis.

Dr. Frank, the seven physicians who are members of the Flagship executive committee, and four other physicians who are on the Flagship board are all Hopkins faculty members. Kennedy Krieger is beside Johns Hopkins medical facilities in East Baltimore, but is not a part of Hopkins.

"Almost all of us are Hopkins-affiliated, but the object is not to make this a Hopkins thing," Dr. Frank said. "The object is to build a very good network."

Physician networks are growing rapidly in response to the impact of managed health care. Managed-care insurers are seeking to shift risk through capitated contracts, in which doctors are paid a flat rate per person per month.

To accept capitated contracts, doctor groups need to be large enough to build capital and to spread risk over a sizable pool. They find a capitated system appealing because it gives them a chance to profit from practicing efficiently, and because it can free them from guidelines imposed by insurance companies over such questions as whether a patient needs to see a specialist.

"Physicians cannot control care unless they accept risk," Dr. Frank said. He said Flagship was a response to "the corporatization of health care," and that it hoped to include between 750 and 1,000 physicians in the mid-Atlantic region within five years.

Nationally, some networks are owned by hospitals, others by publicly traded companies. Doctor-owned networks are also growing in popularity; the American Medical Association, for example, has a new program to link doctors with venture capitalists.

There are several other doctor-owned groups in the Baltimore market, although most have some investment from hospitals. Dr. Frank said he cannot disclose the source of capital for his group, but he said no financing has come from a hospital.

Also, many physician networks have been concentrating on primary care doctors -- internists, family practitioners and pediatricians. Dr. Frank said his group is more "specialist-friendly," and will eventually consist of about 70 percent primary care doctors and 30 percent specialists.

Dr. Scott M. Rifkin, chairman of Doctors Health System, said he believed Flagship would come into existence as the second-largest physician-owned group in the area. Dr. Rifkin's group has 253 physicians.

"They're a good group of docs," Dr. Rifkin said of Flagship. "We view them as potential competitors but also potential friends." He said physician groups could cooperate by, for example, subcontracting.

Pub Date: 3/28/96

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