HelixCare to purchase Physicians Planning Group Primary care network of 35 doctors targeted

September 17, 1996|By M. William Salganik | M. William Salganik,SUN STAFF

HelixCare announced yesterday that it will acquire the 35-doctor Physicians Planning Group from Coastal Physician Group of Durham, N.C.

In buying the group of primary care physicians with offices in Parkville, Towson, Timonium, Westminster and Catonsville, HelixCare is increasing its number of employed doctors by more than 50 percent, to 95, and adding 40,000 patients covered by fixed-fee contracts.

"It's a big step for us," said Dr. Michael C. Tooke, president and CEO of HelixCare.

The sale also marks a strange twist in the recent rush by hospitals, physician-owned groups and investor-owned companies to buy doctor practices -- it's a rare case of physician practice resale. Coastal bought Physicians Planning Group two years ago.

James G. Baker 3rd, an analyst with Equitable Securities in Nashville, Tenn., said that he thought the resale was "unique" to the financially-troubled Coastal: "I wouldn't say it's a trend."

But Dr. Edward L. Perl, the pediatrician who created Physicians Planning Group with Perry Snyder, an accountant, foresees resales of practices becoming more common.

"A lot of people are in the business of acquiring practices," he said. "Some are finding they shouldn't be in the business of owning primary care sites, and I think it will shake out to a few major players in the marketplace."

Coastal, which went public in 1992 as a company specializing in contracting to run hospital emergency rooms, branched out into other medical ventures as its stock -- like that of other physician-practice companies -- soared. But the once-profitable Coastal lost money for five consecutive quarters, including $24.9 million in the second quarter of this year alone.

"Our board of directors in July approved a comprehensive business plan, which involved selling what we view as noncore assets and revitalizing our core business," the emergency room operations, said Robert P. Borchert, Coastal's senior vice-president for corporate communications.

He said Coastal holds about a dozen emergency room contracts in Maryland, but owns no more primary care practices in the state. Counting Physicians Planning Group, he said, Coastal had owned 43 primary care sites in four states; all the others are for sale as well.

"Once Coastal decided it was going to divest its assets, Helix approached Coastal," Perl said.

In addition to the sale of the physician group to HelixCare, Perl and Snyder have reacquired HealthCare Automation, Inc., a company performing billing and other management functions for physician practices. They had sold HealthCare Automation to Coastal along with the physician group in September 1994. Coastal, which paid 857,000 shares of stock valued at $29.5 million at the then-current price of $34.50 a share, said it expected to realize $17 million from the sale.

Coastal stock closed yesterday at $6.50 a share, down 37.5 cents for the day.

HelixCare, which began operations in July 1995, has contracted with HealthCare Automation from the beginning as a claims administrator, Tooke said, and that relationship "really led to this step."

Although HelixCare is affiliated with the five-hospital Helix Health group, Perl said doctors in his group will continue to admit patients to whatever hospitals they consider best. Several of the Physicians Planning Group offices are not near the Helix hospitals: Church, Franklin Square, Good Samaritan, Harbor and Union Memorial.

Also, Snyder said, the sale would have no effect on administrative contracts held by HealthCare Automation.

Although the sale of his practice from Coastal to HelixCare was outside his control, Perl said he was pleased to have "a local owner that will grow and market these offices appropriately."

Pub Date: 9/17/96

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