Nueterra Welcomes Big Growth
Kansas City Business Journal
Nueterra Healthcare LLC has gone from zero to three in 18 months.
If that doesn't sound like much, consider that growth represents the number of multimillion-dollar deals the Leawood-based company has put together through its new Community Hospital Division.
"That is pretty aggressive," division President Mike McCoy said. "We are pretty proud of that – and there are more to come."
Nueterra expects the division to account for about a third of the company's revenue within the next three years. The company does not disclose revenue.
Great Bend Regional Hospital, an expansion of an earlier Nueterra project in Great Bend, Kan., is expected to open next month. Two hospitals the company is developing for Methodist Health System in suburban Dallas are expected to open in 2010. And McCoy said Nueterra also has other projects in the pipeline.
The company traces its roots to an initial outpatient surgery facility in Dodge City in 1989. It relocated to the Kansas City area in 1998, a year after the formation of Nueterra Healthcare.
Nueterra's core business has been the development, construction and management of ambulatory surgical centers and surgical hospitals, with physician investors as partners. Typical services at the surgical centers include hip and knee replacements, general surgery procedures, such as appendectomies, along with gynecology and ear-nose-and-throat services.
McCoy said it was a logical progression for the company to expand into the hospital market.
Methodist Health System's $38 million hospital in McKinney, Texas, will serve as the general hospital in a master-planned community, said Michael Arvin, senior vice president and chief development officer of the system.
Arvin said the $60 million Methodist Hospital for Surgery in Addison will provide highly specialized spine and joint surgery. A groundbreaking for the hospital was scheduled for June 3.
Methodist is a decades-old nonprofit health system with full-service acute-care hospitals and a network of community clinics, Arvin said. Nueterra's expertise in smaller, targeted facilities is helping the system expand into the rapidly growing bedroom communities north of Dallas.
Methodist has been "absolutely thrilled" with its partnership with Nueterra, Arvin said.
Dr. Ted Epperly, however, is not enamored with the business model of Nueterra's hospitals or other facilities.
Physician investment can create a conflict of interest because these doctors might have a financial incentive to refer patients for services, said Epperly, president of the Leawood-based American Academy of Family Physicians.
Similarly, he said, these doctors could refer well-off patients to their facility while the remainder go to the established local hospital. This lost revenue can hinder those hospitals' abilities to provide needed services, such as mental health care and social work, Epperly said.
"As family doctors," he said, "we get concerned when we see a model like this because of what it means to other aspects of health care that need to go on."
McCoy said Nueterra simply builds facilities where a community or physicians express a need for more services.
In Methodist Health System's case, Arvin said, expansion into the suburbs will generate revenue for continued service within its established service area in south Dallas, which is not as affluent.
Plus, he said, physician ownership gives the doctors more say in the delivery of care.
"And that, at the end of the day, is really what they want," Arvin said.
© 2009 American City Business Journals, Inc.
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