Hospital to buy doctors' group assets

Tufts-New England Medical Center is buying the assets of a large primary care physicians group, a move that will nearly triple the network of doctors referring patients to the teaching hospital for complex procedures.

Ellen Zane, chief executive of Tufts-NEMC, wants to expand the hospital's small network of primary care doctors so it will be better positioned to compete in Boston's crowded hospital market. Many other teaching hospitals already have large primary care networks, and Zane said this is a first step toward developing one for Tufts-NEMC.

The hospital now has about 60 internists and other primary care doctors in its network, most of whom work at the hospital's Chinatown campus. The new agreement with Primary Care LLC will add 164 physicians who practice throughout Southeastern Massachusetts, including Cape Cod. The doctors have about 500,000 patients.

Tufts-NEMC lost $54 million over the last two fiscal years, but is starting to show signs of improvement. For the most recent quarter, it posted an operating profit of $2.4 million, compared to a loss of $5.8 million for the second quarter of 2004.

Zane and Dr. George Beauregard, president of Primary Care, would not disclose the purchase price or other terms of the deal. They said the two entities have entered into a ''memorandum of understanding" under which the doctors' group will become a subsidiary of Tufts-NEMC. They plan to negotiate joint contracts with managed care insurers and share certain quality improvement programs. Individual doctors will not be employees of the hospital and will retain ownership of their practices.

The group will change its name to New England Quality Care Alliance. Details are expected to be finalized by October.

Primary Care also considered proposals from Boston Medical Center, Beth Israel Deaconess Medical Center, and Partners HealthCare, the parent organization of Massachusetts General Hospital and Brigham and Women's Hospital. It even began negotiations with Beth Israel Deaconess, but the two sides ended those talks in December.

Primary Care refers the bulk of its patients to Beth Israel Deaconess and Boston Medical Center, executives said, which stand to lose a portion of that business to Tufts-NEMC as the new relationship develops.

Beth Israel Deaconess executives said they are not concerned. ''We have relationships with many of the physicians in that group," said spokeswoman Judith Glasser. ''We have been told by many of the doctors that they have no intention of changing their referral patterns."

Zane said that under the agreement, doctors are not required to refer a specific number of patients to Tufts-NEMC. Such referrals should happen naturally, she said, as Primary Care and Tufts-NEMC jointly negotiate so-called pay-for-performance contracts with health insurers. Under these increasingly popular contracts, hospitals and doctors can earn bonuses for proving that they provide a high standard of care to patients with specific illnesses, such as diabetes.

Primary Care doctors also will have ''preferred access" to Tufts-NEMC for their patients, which Zane said means they will receive a higher level of service from the hospital's specialists and surgeons, including prompt return phone calls and reports on hospitalized patients. While Primary Care doctors will honor historical relationships patients have with specialists at a variety of Boston teaching hospitals, Beauregard said that over time doctors in his group will want to refer to Tufts-NEMC because the of the quality of care and service.

As part of the deal, Tufts-NEMC is purchasing the group's assets, which mostly consist of intellectual property such as disease management programs for patients, programs to improve the quality of care, and an extensive patient registry that tracks how successfully doctors treat patients' illnesses. Because the hospital does not have a large number of primary care doctors, it has not developed these types of programs yet and will use Primary Care's systems as a platform for other doctors who join Tufts-NEMC as it expands its network.

Liz Kowalczyk can be reached at kowalczyk@globe.com.