Behind the OSS Buyout

A move by Mercy last month to purchase the former home and assets of independent group Orthopaedic Specialists of Springfield is causing a ripple effect in the city’s health care market.  

On Aug. 31, OSS closed its doors at 1151 E. Montclair St., eliminating roughly 70 jobs. Its nine physician partners have been split up, with five taking positions with Mercy, three joining CoxHealth, and one taking the clinic’s former administrator with him to Ozarks Community Hospital.

Mercy officials in Springfield said a shortage of Mercy orthopedists serving the Joplin market drove the decision to hire the former OSS doctors, and longtime rapport with OSS partners led to the discussions that ultimately resulted in one less orthopedic competitor in the Springfield market.   

The moves come as Mercy builds its $116 million orthopedic hospital at the corner of U.S. Highway 65 and Evans Road.

David Globig, vice president of operations at Mercy Hospital Springfield, said Mercy gained a 77,000-square-foot property that includes a surgery center, an imaging center and physician offices. Mercy did not disclose the purchase price for the property, which was appraised by the Greene County assessor this year for $8.7 million. Mercy also landed five of the former OSS doctor partners and has since hired roughly 20 former OSS staff members. Hand surgeons Drs. Michael Grillot and J. Scott Swango are now working in Springfield and also will provide regional orthopedic coverage in Joplin. Drs. Thomas McClain, Paul Olive and David Rogers will be based in Joplin.

Drs. David Hicks, Robert Bennett and Chris Miller joined CoxHealth’s Ferrell-Duncan Clinic after the closure, and CoxHealth officials say the system has hired roughly a dozen former OSS staff members.

Dr. Edwin Roeder has moved his practice to Ozarks Community Hospital, one of five OSS staff members to land at OCH. Last month, OCH purchased the vacant Joe’s Carpet store at 1540 E. Evergreen St. for an undisclosed price with plans to renovate the 24,800-square-foot building for Evergreen Clinic, which will include Advantage Therapy, a tenant of the OSS building. Mary Sherrer, former OSS clinic administrator, will manage Evergreen Clinic, which is expected to be open early next year, according to OCH spokeswoman Andrea Harp. Roeder has worked part time for CH for eight years, Harp said.

Dr. Fred McQueary, president of Mercy Clinic North Central Communities and a principal negotiator on the OSS deal, said he had established relationships with several OSS partners and opened discussions with them well before formal negotiations began in early 2012. He said negotiations were complex because they involved a mix of OSS partners and investors who owned the practice and the building.

“We had some interest in expanding our orthopedic services in a number of areas, particularly with hand surgery in Springfield and orthopedic programs, in general, in Joplin,” McQueary said, who had worked as a partner with Drs. Olive and McClain.

Dr. Miller said OSS partners voted unanimously about six months ago to approve the sale of OSS’ assets. “Mercy actually approached OSS before the tornado in Joplin,” Miller said. “It wanted a bigger presence in Joplin and it wanted physicians to go there, and there were several in the group who were interested in that. Part of the deal with them going to Joplin was that (Mercy) would purchase our building.”

Globig, who is overseeing the transition of assets, said the move was not about eliminating competition.

“We looked at a lot of different options, including physicians in the Joplin community and that region to be part of the system, and we were not able to come to an agreement or find those who would be a good fit,” Globig said. “This was an option that came on the table, we were excited about, and we felt was the best solution for the Joplin community and our Mercy Hospital in Joplin.”

The demand for orthopedic services in the greater Joplin market has been on the rise, according to Joe Caputo, CEO of Ortho Four States in Galena, Kan., just seven miles west of Joplin. He said the orthopedic group, which formed in Joplin in 2007, recorded 94 percent revenue growth in 2010 after moving to Galena.

Growth has been driven, in part, by an aging population and more acute youth sports injuries, and Ortho Four States is responding by building a $21 million, 65,000-square-foot orthopedic hospital.

Similarly, Marlene Reinike, office coordinator at Joplin’s Freeman Orthopaedic and Sports Medicine, said its patient volumes are on the rise, and the practice is drawing from a wider geographical area.

“We see more arthroscopic surgeries, more procedures done in an outpatient setting, and more school sports departments than we used to,” Reinike said, adding that Freeman’s six orthopedic surgeons and five physician extenders performed 2,500 surgeries and managed 20,000 office visits last year.

Globig said Mercy has no current plans for the OSS building, which is home to Advantage Therapy and Peak Performance Physical Therapy through the end of the year.

Miller is no stranger to Cox, having covered calls at its emergency room and operated on patients at both Cox South and the Meyer Orthopedic Center outside of his practice at OSS. When Cox became aware of the potential moves, Miller said he was approached about joining the Ferrell-Duncan Clinic.

“Really, I just moved my office down the street,” he said, declining to disclose both the purchase price and his share.

Miller said he and the partners were troubled by shutting down the independent practice, but they believed that most of the staff would be able to find jobs at either Mercy or Cox.

Joplin Tri-State Business Journal Editor Carole Liston contributed to this story.