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Published August 17, 2010, 12:00 AM

Sanford plans merger with Orthopaedics Associates

The merger of Sanford Health and Orthopaedics Associates would mean all but a handful of orthopedic surgeons in Fargo-Moorhead would practice under one health system.

By: Patrick Springer, INFORUM

The merger of Sanford Health and Orthopaedics Associates would mean all but a handful of orthopedic surgeons in Fargo-Moorhead would practice under one health system.

The two organizations have signed a letter of intent to join forces, with a target date of this fall.

The Institute for Specialized Surgery, the outpatient surgery center associated with the orthopedic clinic, but also available to other independent surgeons, also has signed a letter of intent.

If the deal comes together as planned, it would significantly alter the medical landscape in Fargo-Moorhead.

Sanford would control the vast majority of the orthopedic medicine market, combining the eight Orthopaedic Associates surgeons with its team of nine orthopedic surgeons, two hand surgeons and seven podiatrists.

Innovis Health now has five orthopedic surgeons – three based in Fargo and two in Detroit Lakes, Minn. One of those Fargo-based surgeons, however, Dr. Bruce Piatt, will be joining Sanford this fall.

Dr. Mark Lundeen of Orthopaedic Associates said he has assurances from Sanford that nothing will change in the clinic’s medical practice or referrals to outside specialists – points that are an important part of ongoing negotiations toward an agreement.

“I understand the anxiety, I really do,” Lundeen said of the possible merger. “I understand how people on the outside would be concerned about that. We’ve expressed those concerns to the people at Sanford,” adding that the two parties are in agreement on the issue and in overall philosophy.

“Everything that we’ve heard them say matches the vision we’ve had,” he said, adding, “We’re excited” about planned initiatives in orthopedics and sports medicine that will be important “not only for health care but the whole community.”

Still, the alliance of Orthopaedic Associates with Sanford also would mean a decline of more than 10 percent in the number of independent physicians in the area.

The Heartland Independent Provider Network includes 78 physicians, and Orthopaedic Associates is one of its larger clinics, said Sue Mullins, the independent network’s executive director.

“That would be a very sad loss for the network because they have been independents for many, many years,” Mullins said. She added: “I have not been notified that anybody’s leaving. I can’t speculate what we’ll do or what will happen.”

The Heartland network also includes two other independent orthopedic surgeons, both of whom have offices in the Orthopaedic Associates building, and two hand surgeons.

Orthopaedic Associates already was part of the Sanford referral network, Mullins said, and independent physicians commonly have relationships with both Sanford and Innovis through managed care contracts and hospital admitting privileges.

Dr. Bruce Pitts, president of Sanford Health Clinic Fargo, said the merger with Orthopaedic Associates reflects several forces that are changing health care delivery.

A future of decreasing reimbursements from payers, increased financial risk for medical providers and increasing costs for medical technology and electronic medical records all are among the factors driving consolidation in health care, Pitts said.

Along with the increasing complexity of the business of health care, more small-specialty clinics and independent physicians are considering aligning with large, multispecialty groups that integrate clinical and hospital care, he said.

“The difficulties of running a practice are so great,” he said. “There are just a whole lot of things that are causing physician groups to seek relationships with an integrated health system.”

For those reasons, continued consolidation is likely to unfold in the medical industry as providers seek strength and depth by joining together, Pitts and Lundeen say.

Although Americans have a reflexive preference for competition and consumer choice, Pitts said the reality in health care, particularly for specialized care, is that competition often results in costly duplication of services.

Health systems that can coordinate the full spectrum of patient care have proven to be the most cost-effective, and deliver the best outcomes – and for that reason are being encouraged by federal health reform, he said.

Some specialties face fewer pressures, such as the need to provide costly technology, and will be slower to integrate, said Lundeen, whose 30-year medical career has been as an independent surgeon.

Patients will continue to seek out independent doctors, Mullins said.

“People always come to the independents for the one-on-one contact,” she said. “We don’t have the long waiting periods. It’s a down-home feel, and people want that.”

Readers can reach Forum reporter Patrick Springer at (701) 241-5522