Holt-Krock controversy ends
by February 8, 1999 12:00 am 871 views
The acrimony between Fort Smith’s Holt-Krock Clinic and PhyCor Inc. ended Jan. 26 with the announcement that Sparks Regional Medical Center is buying the clinic.
Most of Holt-Krock’s 84 physicians are expected to join the hospital’s Sparks Medical Foundation as part of the deal, and PhyCor will assume responsibility for $1.7 million in operating losses incurred by the clinic during the fourth quarter of 1998. PhyCor says it expects fourth-quarter earnings to be reduced by about 1 cent per share as a result but 1999 earnings are not expected to be affected.
The deal gives Sparks the Holt-Krock name and the 300,000-SF building and effectively ends all litigation between the parties.
The relationship between Holt-Krock, one of the largest clinics in the region, and PhyCor had grown increasingly strained. More than four dozen physicians left the clinic last year and various lawsuits were pending.
PhyCor, a physician practice management company based in Nashville, Tenn., bought the clinic in 1994 for $47 million in an agreement that netted each of the clinic’s 145 physicians about $300,000. PhyCor was to receive a 15 percent annual management fee.
But in the years since, physicians contended PhyCor’s billing and computer system was inadequate and that expenses increased while their income declined. The physicians were also unhappy about non-compete clauses in their contracts with PhyCor that prevented them from opening competing practices within a 30-mile radius of the clinic for 18 months. Thirty-nine doctors sued over the noncompete contracts and PhyCor and Holt-Crock countersued.
The dispute gained national attention because many physicians now work for firms like PhyCor or are facing pressure to do so. Instead of being independent business people, physicians are, in many areas, becoming employees of other businesses.
The Holt-Krock sale, which is expected to close by April 30, will give Sparks Medical Foundation 156 physicians and 37 locations. Sparks will assume full ownership of PremierCare Fort Smith, the insurance plan offered by Holt-Krock, and the physicians will continue to participate in the same insurance plans as it has previously, including PremierCare, QualChoice, United HealthCare, Prudential, Medicare Complete and Medicare assignment.