Sacred Heart Medical Center has reacquired the assets of Doctors Building Day Surgery, which for the last two years has been owned and operated as a for-profit venture by Inland Northwest Ambulatory Surgery Center LLC.


The hospital has bought out the interests of four surgeonsCharles Benage, Gerald Olmsted, L. Elizabeth Peterson, and James Wattswho were investors in the concern and collectively owned about 2 percent the joint venture, says Gerard Fischer, a Sacred Heart vice president. Because Sacred Heart wanted doctors to have a large role in running the center, the four surgeons also made up half of the board that oversaw the center, along with four representatives of Sacred Heart. The board voted unanimously in late February to return the $3.4 million in surgery-center assets to the hospital. Sacred Heart is waiting for state licensing requests to be finalized for the transfer to be official, something Fischer expects to happen very soon. He anticipates that the transfer will be made retroactive to March 1, and says the hospital already has taken over the day-to-day operations of the practice.


Once the transaction is completed, the surgery center will operate under the hospitals license and will no longer be a for profit concern, as was the case before the joint venture was formed. Inland Northwest Ambulatory Surgery Center LLC will continue to remain in existence so that a similar venture could be established easily in the future, should favorable conditions arise, Fischer says.


Sacred Hearts original intent in forming the limited-liability company in 2000 was to establish a closer working relationship with doctors in the community, and to make the surgery center more efficient by involving surgeon investors in the day-to-day operations of the center, he says. The goal was to have at least 50 percentand as much as 80 percentof the center owned by physicians. An assessment at that time indicated a strong interest in such a venture in the surgical community, but the center succeeded in attracting only the four investors, and the original goals of greater efficiency and cooperation couldnt be met, he says.


Says Fischer, We felt that its not working at this time, so lets put it back under the hospitals license.


Watts, who chaired the surgery centers board, says a lack of efficiency and profitablilty made the center unable to operate independently of the hospital. For example, all of the physicians who use the center have their own preferences when it comes to what equipment they use. That led to the center having multiple pieces of equipment that all performed the same function, which drove up costs. If more of the physicians had been investors, they would have had an incentive to standardize things such as equipment, drug usage, and scheduling practices, he says. Furthermore, the high cost to patients of having surgeries performed at the center meant that insurance companies wouldnt cover the expenses fully, he says.


Watts says the lack of interest in the joint venture from surgeons stemmed from a lack of trust between the physician community and the hospital community.


(The lack of interest) saddens me, because I think it was a great vehicle to develop trust between physicians and hospitals, he says.


Fischer says doctors had several reservations about investing in the center. Some had questions about how good a partner Sacred Heart would make, he says. Also, at the time the joint venture was formed, talk of a prospective orthopedic outpatient surgery center here caused concerns about how much business the day surgery would be able to attract, he says. Such an orthopedic center hasnt been established.


Doctors Building Day Surgery has six operating rooms on the fifth floor of the Sacred Heart Doctors Building, at 105 W. 8th. More than 100 surgeons regularly work at the center, performing about 400 urological, gynecological, orthopedic, ear-nose-and-throat, podiatric, and general surgeries per month, Fischer says. He adds that no changes should be apparent to surgeons or patients at the center. The centers staffing will remain the same, because the for-profit concern leased its staff from Sacred Heart, he says. The center currently employs about 50 people. Fischer says about five people, mainly in recordkeeping positions, were laid off because their duties were absorbed by other employees of the medical center.