Colorado Springs Health Partners gets new owner: How are patients affected?

October 23, 2014 Updated: October 23, 2014 at 5:20 am
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Denver-based kidney care giant DaVita HealthCare Partners Inc. announced Wednesday it has acquired Colorado Springs Health Partners, the largest health care practice in Colorado Springs - a deal that could change the face of local health care.

Terms of the deal, which is expected to be completed by year's end, were not disclosed. Colorado Springs Health Partners is owned by 76 of its 114 doctors, and all 76 approved the deal, said Deborah Chandler, CEO of the 68-year-old practice.

The acquisition isn't expected to mean many changes for CSHP's 110,000 patients, since DaVita will keep the practice's management team and retain its more than 600 employees. But both CSHP and DaVita believe it will result in improved patient care, Chandler said.

The practice operates 11 offices in the Colorado Springs area.

"They are the kind of physician group we love to align ourselves with. They are clinically excellent, have thoughtful governance and are a market leader." DaVita CEO Kent Thiry said Wednesday in an interview.

The transaction has its roots in the Affordable Care Act, often called Obamacare, said Chandler, who will be Colorado Springs market president of DaVita after the sale.

The ACA prompted CSHP's physician owners to start thinking about whether they needed to "partner with a larger organization" to gain access to the financial resources needed to expand, Chandler said.

She contacted DaVita in late 2012, when it completed its $4.71 billion acquisition of HealthCare Partners, the nation's largest physician practice, which provides care for more than 800,000 patients in six states. That led to a series of meetings between CSHP and DaVita executives, visits to HealthCare Partners locations in California and Las Vegas and calls between doctors from CSHP and HealthCare Partners, Chandler said.

CSHP and DaVita signed a letter of intent in November for the acquisition and negotiated the details over the past 11 months, she said.

"They are looking for successful, like-minded organizations with experience in care coordination," Chandler said. In care coordination, doctors work in care teams to manage the health of all patients, not just those who come in for an appointment.

"We have been on the cutting edge of health care delivery reform," she said.

CSHP needed a partner with more financial muscle because it has been adding about 2,000 new patients a month this year as more people have gained health care coverage through the Affordable Care Act and a related expansion of the federal Medicaid program, said Lynne Jones, CSHP's director of business development and marketing.

During the past year, CSHP opened expanded offices in Woodland Park and the west side of Colorado Springs and is building an office in Monument.

"We have been looking for a physician-led partner for some time," said Dr. Dennis Schneider, CSHP's chief medical officer. "They will bring advanced methods and techniques for managing the health of an entire patient population. We hope that will result in higher quality, lower cost and better patient satisfaction. We have been doing this for awhile; now we can do it better."

Although DaVita operates dialysis centers across Colorado and its Paladina Health LLC unit operates on-site clinics for employees of Spectranetics Corp. and several other businesses in the Denver area, the CSHP acquisition gives the company its first medical practice in the state where it moved its headquarters in 2009. Thiry said the company plans to use CSHP to expand elsewhere in Colorado, which could come through opening new offices or acquiring other practices.

DaVita eventually wants to expand its other practice, HealthCare Partners, nationwide and beyond, Thiry said, though he added that reaching that goal "would take a long time." The company wants to change how health care is delivered by focusing on preventing health problems rather than waiting to treat patients once they are sick, he said.

The deal with CSHP comes three months after Thiry stepped in temporarily to run HealthCare Partners, hoping to reverse a "difficult 18 months" after acquiring the practice. DaVita has reduced its revenue forecasts for HealthCare Partners in each of the first two quarters of this year. Despite those setbacks, Davita's earnings in the first half of the year were up 14.6 percent from a year earlier to $393.2 million, or $1.53 a share, with revenue increasing 9 percent during the period to $6.22 billion.

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