Physicians Medical Group of Santa Cruz joins with Dignity Health

Dignity Health Medical Foundation signed an agreement to manage the health plan administrative functions for Physicians Medical Group of Santa Cruz.

Physicians Medical Group, a network of 250 primary care and specialist physicians in Santa Cruz County, was founded in 1994. About 20,000 people have a health maintenance plan through PMG.

As part of the agreement, Dignity Health will acquire Physicians Medical Group’s HMO administrative functions and Physicians Medical Group’s independent physicians will affiliate with Dignity Health. Physicians Medical Group will change their name to Dignity Health Integrated Network – Santa Cruz. The changes are expected to take place in July.

“This agreement is good news for our patients who will benefit in the long run from more integrated and comprehensive services for the community, including more coordination between health care providers and the possibility for additional health plan options,” Physicians Medical Group said in a letter to patients. “It will also enable PMG affiliated physicians to stay local and remain independent while continuing to offer the high quality care that our patients expect. We also anticipate that we’ll be able to bring in additional needed primary and specialty care physicians into the community.”

“It will provide us with a broader network of providers to the Santa Cruz Community,” said Dean Ward, vice president of operations at Dignity Health Medical Foundation. “It makes us more efficient because we don’t have to go out and recruit all these physicians and build offices. To be able to affiliate with a group of physicians in other networks is an advantage in time and money.”

Dignity Health Medical Foundation already manages administrative functions for 1,500 medical groups and independent physician associations throughout California. The affiliation with Physicians Medical Group will add 100 new locations to their network.

The percentage of independent physicians has dropped since 2000, and is projected to continue to decline. This trend has been attributed to changes under the ACA as independent physicians struggle to keep pace with market changes and the push toward accountable care organizations. In a study conducted by Accenture, the two factors physicians cited as their biggest concerns with remaining independent were reimbursement pressures (36 percent) and overhead cost (23 percent).