Local Physicians Benefit from MSI

The Pentagon could learn a lot from Larry Shackelford.

As CEO of Medical Services of Northwest Arkansas Inc., Shackelford has helped develop multiple cost-efficient measures that have offered dozens of local physicians previously undiscovered success.

MSI’s state-of-the-art management and information systems have allowed four different medical groups to merge their resources. The three original groups — Northwest Arkansas Pediatric Clinic, FirstCare Family Doctors and Fayetteville Diagnostic Clinic — were recently joined by MediServe Walk-In Clinic of Fayetteville. MediServe was acquired from HealthSouth, giving MSI about 50 physicians overall in its group.

The idea of having a central management system is not a new one, but having it owned by the physicians themselves is a rarity. St. Mary’s Hospital in Rogers does it with a group of clinics, and PhyCor Inc. of Nashville tried unsuccessfully to organize a group of physicians with Sparks Regional Medical Center in Fort Smith. The latter resulted in a hostile legal dispute between PhyCor and Sparks that was eventually settled out of court.

“I think we’ve benefitted from examples to the north and south of us,” said Dr. Larry Salmon, an internist with the Diagnostic Clinic and an MSI board member. “The St. Mary’s deal has not been terribly satisfactory. And PhyCor has been a fiasco.”

Meanwhile, MSI has flourished since starting business in June of 1998. In its first full year (1999), MSI enjoyed $1.11 million in revenue. The following year it grew 38 percent to $1.53 million. And the projection for 2001 is for more than $1.96 million.

“Hospitals just don’t have the same setup [as MSI],” said Dr. Joe Robinson, president of Northwest Arkansas Pediatric Clinic and also chairman of the MSI board. “It’s a different animal. They don’t expect to have the same kind of expertise.”

MSI has a strong relationship with Washington Regional Medical Center. Shackelford said the “lion’s share” of patients admitted to WRMC for primary care comes from within the MSI group.

WRMC purchased a minority share in MSI.

And MSI does work at some of the outlying WRMC clinics.

“We do some work for clinics that are not necessarily in our group,” Shackelford said. “We’ll do some operational audits, look at their systems, their coding and billing procedures, then come back with recommendations and how to improve their practice.

“What we’ve found is that our physicians talk to other hospitals in other communities, and they’ll say to us, ‘Here’s a need. Would your organization be able to help?'”

One of the unique aspects of MSI is that Shackelford and others were given a chance for ownership interests. In medical practice, an owner must be a licensed physician.

Robinson said MSI came to fruition due to Shackelford’s foresight and because of a dilemma facing the Northwest Arkansas Pediatric Clinic.

Shackelford had been with the Diagnostic Clinic but was hired by the Pediatric Clinic to be its administrator. When another opening occurred at the Diagnostic Clinic, Robinson said he feared Shackelford would be leaving.

“We started talking about instead of losing Larry back to them, how could we work it out to take the administrative staff we had and combine it with the administrative staff they had. That’s what got it rolling. But a whole lot of it was a vision of Larry’s.”

Each office that became a part of MSI contributed based on the number of physicians in their practice.

Physicians have found that running their businesses is much more complex than it used to be. Shackelford said MSI has filed claims with more than 1,000 insurance companies.

“What the physicians have found is that in order to maintain ownership in their practices, they have had to become as efficient as they can in order to compete,” Shackelford said.

Local ownership, Shackelford feels, is just one reason MSI can be so cost-efficient. The wide range of expertise within the groups making up MSI allows them to share knowledge on a large scale.

Shackelford said an example was MSI’s systems department.

“John [Jordin] is our systems guy,” Shackelford said. “When we started we had five different systems guys that didn’t talk to each other. Now, they’re all on the same page and networked together.”

Working as a patient advocate, MSI has more strength in the community simply with its numbers. It can better deal with insurance companies and hospitals because of its diversity in the field.

Now, where one clinic once had to hire its own collections person, billing person, etc., offices within the MSI group can rest easy knowing they have several individuals working for them. There are actually more individuals working for them through MSI, but at a lower cost.

“[MSI] has helped us share administrative costs and decrease our overhead,” Salmon said. “And we can hire better people for the clinics because we can hire one person instead of three people for three different clinics.”

Robinson said day to day tasks that are necessary in all the offices can now be done in one office, foregoing redundancy since everything is essentially under one roof.

“This way [MSI] is able to bring us a good package with the information we need and do it a lot more efficiently,” Robinson said. “They’re doing it for 50 or more doctors, rather than just three in this group, four in that group and three in another group. With their multiple skills because it is such a large group, it’s advantageous to our administration.”

Salmon said the “community effort” in coordinating recruiting helps ensure that they don’t bring doctors into the group who won’t be busy enough.

Having ownership in MSI is something from which both the physicians and WRMC benefit.

“Our group is acutely aware of that fact, and I think Regional prefers it that way,” Salmon said. “It makes you more motivated to work. We have vested interests in making ourselves successful, and if we’re successful, Regional’s going to be successful. It’s pretty rare in the United States to have a hospital and a physicians group work this well together.”

The MSI group includes 256 non-physician employees. It is attempting to acquire 12,000 SF at the former Watson’s Supermarket building on Huntsville Road in southeast Fayetteville. The acquisition would enable all of the groups within MSI to have additional medical office space. Shackelford said the idea is similar to what banks do in branching out to different areas of the community to make it more convenient for the clients. He would like to see the new site become somewhat of a small medical area with perhaps a pharmacy or other medically related stores opening nearby.

Short-term goals include developing an electronic medical record that can be E-mailed from clinic to clinic.

“We’re going to try to do some things for the patients next,” Shackelford said. “We’re continuing to look at what new services we can provide in our office at a better price and more convenience to the patient.”

But Shackelford said he would rather see “reasonable growth” with MSI rather than growth just to bring more physicians in the group.

“Our owners are the practicing physicians in Northwest Arkansas,” Shackelford said. “That’s the core of our business. What we’re trying to do for our physicians is let them spend their time doing what they went to medical school to do — take care of patients.”