Children’s Health has entered an agreement to sell 13 of its 17 clinic locations to MD Medical Group, a fast-growing chain of clinics that operates locations in areas with high Medicaid rates. The Dallas-based pediatric health system will take a minority stake in MD Medical through the transaction, which will close on June 4.
Children’s will close sites at St. Philip’s School and Community Center in Dallas, in Celina, and in DeSoto, retaining sole ownership only of its clinic at the Children’s Health Specialty Center in Dallas.
A spokesperson for Children’s Health says the closures at those locations came after assessments showing that the communities would have access to other MD Medical Group locations or to other providers outside the system. The location at St. Philip’s school—the subject of a CBS-DFW report that broke the news and gave voice to the disappointment of the school’s headmaster—will be equipped with a telemedicine hub.
The 13 facilities that will transition will be rebranded under MD Kids Pediatrics and brought under a model that puts a greater emphasis on nurse practitioners and physician assistants while staffing one to two pediatricians per location, on par with the chain’s other facilities, MD Medical CEO Alvaro Saenz tells me. (MD Medical also operates locations branded Clinicas Mi Doctor and MD Family.) That means that some Children’s Health pediatricians will lose their jobs, in addition to the cuts associated with the three clinics set to close on May 25.
Saenz expects to increase MD Medical’s abilities with regard to telehealth and population tools with Children’s Health as a minority owner. “This is truly more of a partnership between two organizations,” he says.
MD Medical’s new locations serve a population that fit into their larger strategy—a population that other systems generally show less interest in. Former D CEO Healthcare Editor Matt Goodman wrote about that in 2016:
One of the fastest-growing chains of clinics in North Texas dots many of its underserved areas, far from the generally desirable—and profitable—privately insured middle- and upper-middle class, who will come when they get sick and be able to pay. No, the MD Medical Group, which includes the Clinicas Mi Doctor, MD Family, and MD Kids Pediatrics clinic brands, has 32 locations in communities like South Oak Cliff, Pleasant Grove, Garland, West Dallas—places where the median household income can dip tens of thousands of dollars below that of the state’s. Two-thirds of its patients are insured by Medicaid and 18 percent are uninsured or self-pay; many physicians say this population would put them out of business.
MD Medical went after a market that “nobody wants” as Saenz told Goodman in 2016. When I got Saenz on the phone Wednesday, he’d yet to calculate how the percentage of the company’s Medicaid-covered and uninsured or self-pay patients would change post-transaction. But he was certain Medicaid would be represent an even larger portion, and that uninsured or self-pay would account for less of the total pie. MD Medical and the Children’s clinics serve “the exact same populations and we serve them in almost the exact same area,” Saenz says.
He’d also said in 2016 that revenue then was at $55 million, with $8 million in earnings. I requested an update and post-transaction estimate, but he’d been scolded for handing out the info the last time.
“Even in just the two years,” he offered, “we’re definitely in another place with regard to top line and bottom line.”