Case Study: HIMG Regional Medical Center

Huntington, West Virginia

Huntington Internal Medicine Group (HIMG) began as a four physician partnership. Its humble beginnings quite the norm for today’s healthcare world. So imagine the feeling of those original four partners when they awoke one day to a 150,000 square foot medical facility with over 60 partners — grossing an annual revenue of $50 million.

If this seems like a far away, distant dream and not a tale of reality, think again. The HIMG Regional Medical Center, housed in an old Wal-Mart building in Huntington, West Virginia, opened in early 2006.

“We are a medical mall. We’re a hospital without beds,” explains Michael Sundall, chief executive officer of HIMG. “Our whole concept in this medical group is we studied what is going on around the rest of the country. Most healthcare systems are sneezing offices all over; we decided to bring the services to the patient instead of trotting the patient all around.

“We designed this building with the patient in mind. That is why we brought in physical therapy and occupational medicine; we brought in chiropractors, a pharmacy, durable medical equipment, rehab — all into this one building so the patients can have their care in an easy, accessible, lots of parking model.”

The medical mall even has an education center which features continuing education classes and guest speakers from pharmaceutical companies, for example. “That is for our physicians. For our patients, in our community room which is up front, we have a lot of screenings and speakers.

We have everything from ballroom dancing classes to the rotary to the Red Hat Ladies to blood drives, cholesterol screenings, and blood pressure check clinics.” The mall also sports Expresso Mojo, a gourmet coffee shop which also runs the Apple-A-Day Café.

“I can’t believe the people standing in line to get their coffee,” Sundall adds.

This for-profit, West Virginia corporation is 100 percent physician owned. New physicians sign on with a guaranteed base salary plus a bonus opportunity.

Then, depending upon their specialty, in one to two years they become a full partner. “We have no junior/senior type of partnership. Everybody is an equal partner whether you have been here one year or 40 years,” Sundall shares.

He explains that physicians drive their compensation in two ways: 1.) from the professional practice of their specialty; and 2.) they can supplement their income with a variety of ancillary or “designated health services,” as HIMG terms them.

Examples of these “designated health services” include the diagnostic laboratory, full service imaging, noninvasive cardiology, a certified endoscopy surgery center, the chemotherapy center, a hearing center, and the NOWcare center (which mimics an urgent care, but in this model is simply an extended hours doctor’s office).

In addition to these ancillary services (which is owned by the professional corporation), Sundall explains that the doctors also have New Tri- State Ventures, LLC, which is their real estate/ capital equipment entity. New Tri-State Ventures, LLC owns the building, develops the building, and then leases space to HIMG. In addition, the LLC leases space to the other partnered entities housed in the building.

“We’re an adult medical/surgical group. We have tenants — partners — that lease space in the building which compliment our services,” Sundall shares. “For instance, we do not have OB/GYN or pediatrics, but we have practices that lease space from us for OB and peds. A plastic surgeon also leases space from us.” Another facet that makes HIMG Regional Medical Center unique, as well as self-sustained, is its own electronic medical record (EMR) system on which it functions.

The HIMG model is peaking interest around the nation. National players, including Health- South which rents some space for its physical, occupational, and speech therapy, continue to court HIMG for a slice of its futuristic pie. “We’re getting a lot of interest in the concept here and we have had a couple of people check with us to see if it is replicable in their market areas,” Sundall adds.

It’s no surprise that any business person would be intrigued by this model. The numbers alone speak for themselves. Sundall says the group does about 200,000 office visits a year; as well as another 150,000-plus professional procedures, consults, interpretations, etc. “We will do another 400,000 ancillary tests; from labs, noninvasive cardiology testing, X-rays, etc., so in a nutshell, we do about 400,000 professional encounters and 400,000 ancillary. We’ll average probably 16,000 to 17,000 office visits per month in this coming year,” he adds.

But, Sundall warns, it takes some savvy business skills to keep such a giant afloat. “A lot of organizations will say they are cost effective and efficient, etc. We have really had to be. I have been here just seven years, and our malpractice insurance in West Virginia has gone from about $400,000 a year to $1.4 million per year. So we had to really focus on building a system, a structure that is profitable.

“They (HIMG) were a $25 million corporation at the time,” he continues. “These doctors are really good business people. We have been able to maximize our revenue and minimize our overhead. We are now approaching being a $50 million a year company. So, we are hoping through our next phase of growth of becoming a $75 million company.”

This next phase of growth includes adding 18 more physicians between 2007 and 2009 from a vast array of specialties including hematologists, dermatologists, hospitalists, etc. In addition, HIMG is currently in the exploratory stages of forming a partnership with an academic institution.

It is interesting to note that according to the zip code analysis for the HIMG Regional Medical Center, 65 percent of its patients come from outside the city of Huntington — hence the “Regional” reference in the name.

“I wish I would have discovered this medical group 20 years ago,” Sundall adds. “I describe it as the most productive, hardest working, most creative, and most challenging and most fun group of doctors I have ever been associated with. They are a high quality group.”

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