Hartford Business Journal

www.HartfordBusiness.com January12,2015•Hartford Business Journal 3 CMG-Grove Hill merger aims to preserve independent-doctor model By Matt Pilon mpilon@HartfordBusiness.com T wo of Greater Hartford's largest physi- cian groups say they aren't interested in becoming part of a large hospital network, so they're planning to join forces to protect their independent business models. Connecticut Multispecialty Group (CMG) and New Britain's Grove Hill Medical Centers plan to merge their 185 doctors this year. And while their combination is in line with the con- solidation trend sweeping across Connecticut's healthcare industry, they're bucking indepen- dent doctors' inclinations to join hospitals. "Sooner or later, there's only going to be hospital-based groups or large groups of doc- tors," said Dr. Michael Genovesi, Grove Hill's CEO. "That's our big thing. We really want to remain independent. We think that's the best way to practice medicine." His CMG counterpart, Dr. Jarrod Post, echoed similar sentiments. "We see doctors making choices that are to either stay independent or join other entities," Post said. "The pressure is higher than ever." The CMG-Grove Hill deal would be a merger of equals, and the new organization would likely operate under a different name. Post and Genovesi say they've been approached by and turned down a number of would-be acquirers and partners, because they think the physician-run model means a better lifestyle for doctors — with more flex- ible schedules and sometimes better pay — as well as better care for their patients. But if they're going to do a deal — and they each realize at some point they must — Grove Hill and CMG would rather team up together, because the two have a shared history and similar business models and philosophies, Post and Genovesi said. The merger will create a group that, size wise, ekes past Hartford Healthcare Medical Group's 175 doctors and nips at the heels of ProHealth Physicians' 235 doctors. CMG and Grove Hill both say their prac- tices are financially strong and doctors aren't feeling any desperation to do a deal right now. But like many healthcare providers, they see benefits in getting larger, particularly as insurers and components of the Afford- able Care Act press physicians to trim costs through population-based care. "We see more of these contracts that are either shared sav- ings or in some other way valued-based continuing to come forward," Post said. That type of care requires increased tracking of patients, more collaboration between doctors and providers, and greater investment in the right software and IT infrastruc- ture. Bigger organi- zations have a better shot at doing it more effectively, they say. In addition, both practices have com- plementary geog- raphies and a wide variety of special- ists that can keep patients in house, which leads to bet- ter coordination of care, they say. Their combination could also mean taking a piece of a patient's healthcare expen- ditures from other area providers. The benefits of bigger Medical industry experts say the CMG-Grove Hill merger is significant, but it's also part of a larger trend. "Being a small organization, you've got to get bigger to have clout with the payers and to have clout with the electronic health record companies and all that other stuff," said Douglas Arnold, who until recently was CEO of Middletown's Medical Professional Services, which negotiates for and provides services to more than 400 doctors. Genovesi said there's no denying that creating a stronger negotiating position with payers and hospitals is part of the strategy, though he said the combination will also mean better outcomes for patients, which is a benefit for all sides. He said the groups made sure to keep the region's largest healthcare provider, Hartford Healthcare, apprised of the deal, since CMG and Grove Hill both have important patient- care contracts at Hartford Hospital and The Hospital of Central Connecticut. "We'd be lying if we said bigger is not bet- ter," Genovesi said. "It is." Asked for its reaction to the planned merger, Hartford Healthcare released a statement calling CMG and Grove Hill "respected medical groups." "Hartford Healthcare looks forward to continuing our work together with their members and patients as these two groups form a new affiliation," the statement said. Though the two groups decided to announce their merger intentions in late 2014, there is still much to do before the deal is finalized. Like most mergers, each side will vet the other for undisclosed legal liabilities or other problems. One key decision will be deciding if the merged group will do all of its own negotiat- ing with insurers, Genovesi said. While Grove Hill has always done all of its own negotiating, CMG is a member of Hartford Healthcare's clinical integration organization, called Integrated Care Partners. That entity, which includes both Hartford Healthcare doc- tors and those in private practice, negotiates on CMG's behalf for value-based contracts. It is undetermined whether or not Grove Hill and CMG would remain in that organiza- tion post-merger. "Our [agreement] says before we sign the contract, we must agree on how those steps will go," Genovesi said. "We will all have to vote on that, but whatever happens, it has to be united." Much in common CMG and Grove Hill are, in many ways, mirror images of each other. In fact, a physician left Grove Hill in 1997 to form CMG, which has grown to just over 100 doctors in a relatively short amount of time. Grove Hill is one of the oldest physician groups in New England. Both are owned by doctors with a wide range of specialties. There are no investors or other equity partners. Both are close with Hartford Healthcare. They also share similar democratic, phy- sician-owned management structures, in which doctors become equal partners and each has one vote on business matters. The two feel they fit together well, both geo- graphically and in the services they offer. CMG's 17 offices and Grove Hill's dozen offices blanket Hartford County, with Grove Hill's presence more evident in the southern communities. "[CMG] is very strong in Hartford and that whole area, and we're like a very big fish in a small pond around here," said Genovesi from his New Britain headquarters. Both also say they don't feel the immedi- ate need to do a deal. "It's a pleasure to come at this from a posi- tion where we are financially solid," said Post, adding that CMG's revenues have grown 30 percent over the past five years. Grove Hill also Continued Dr. Jarrod Post, CEO of Connecticut Multispecialty Group, sees his physician group's pending merger with Grove Hill as a way to become more proficient in population care. P H O T O | C O n T r i b u T e d PWorld-Class Music Every Week! P4-Star Bistro PSpecial Event Mecca! PCorporate Ticket Program! 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