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Hudson, River Falls clinics stalemated over management

Three doctors representing the Hudson division of an umbrella organization of physicians who staff the Hudson, River Falls and New Richmond clinics are asking the court to dissolve the 16-year-old association.

Alleging a deadlock over management issues, Dr. Dennis Hartung, Dr. Mark Stannard and Dr. Greg Young are asking that Hudson Physicians Division be allowed to separate from Western Wisconsin Medical Associates.

Among the areas of conflict cited in the complaint are a stalemate over a two-year-old plan to build a new outpatient urgent care clinic, surgery center and rehabilitation center, and a general difference in philosophy regarding the services the clinics should provide.

The River Falls clinic is opposed to dissolving WWMA, said Samantha Bluhm, marketing director for the River Falls clinic. She said the clinics have a longtime partnership that was intended to maximize the strengths of each division and provide the best quality health care to area residents.

But, Bluhm said, dissolving WWMA is a business decision that wouldn't directly impact patients.

"As a united organization, WWMA has collaborated on projects and tools that would have been difficult to achieve alone, including healthcare recognitions and awards and the implementation of an Electronic Health Record, a tool that has helped create better models of care for all of our patients," said Jon Pedersen, River Falls clinic administrator.

The Hudson clinic declined further comment at this point.

According to a 15-page complaint filed Nov. 12 in St. Croix County Court, WWMA consists of three divisions: Hudson Physicians Division, New Richmond Division and River Falls Medical Clinic Division. Each operates its own business and serves its own patients.

In 1996 the three separate medical practices merged to form WWMA with each division running separate medical clinics and operating its own business, serving its own patients.

WWMA has four classes of stock: Hudson stock, New Richmond stock, River Falls stock and voting stock. Only physicians licensed to practice in Wisconsin can own stock.

Each physician holds 10 shares of Hudson, River Falls or New Richmond stock, depending upon the division with which he or she practices, and each doctor has one share of voting stock.

The WWMA Board of Directors has nine voting directors and three advisory, non-voting directors. Each division elects three voting directors. The non-voting directors are the administrators of each division.

"HPD, NRD and RFMCD have become deadlocked over the continued existence of WWMA," says the 15-page complaint. "Neither HPD nor NRD wishes to continue its affiliation with RFMCD under the umbrella of WWMA, yet RFMCD has used its veto power under WWMA's governing agreements to stymie any attempt by HPD and NRD to dissolve WWMA voluntarily."

The complaint adds, "Moreover, RFMCD has engaged in unilateral, oppressive conduct that has harmed the HPD shareholders and WWMA as a whole."

The three divisions are all close enough to one another that patients who typically receive care from one division could choose to receive care from a different division, but the complaint says the divisions can't agree on many issues.

"The management of HPD and RFMCD has been at odds with one another for several years," said the complaint. "HPD's leadership envisions WWMA as a premier primary care medical group in the western Wisconsin area that focuses on family practice, OB/GYN, internal medicine, pediatrics and general surgery. By contrast, RFMCD's leadership historically has wanted WWMA to pursue a regional growth strategy and retain physicians with subspecialties beyond primary care.

"Meanwhile, NRD has become isolated from HPD and RFMCD and removed itself from the other divisions' plans to grow WWMA."

Bluhm responded, "Interesting point of view. The goal of RFMC has been to be collaborate and build strong relationships with our WWMA partners.

"We recognize that we aren't perfect, but believe our clinic- and patient-centered philosophies are more alike than different. We've worked together in many areas that have elevated the visibility and quality care of all of our clinics..."

She said awards the clinics have received over the last decade show "what is possible when we work as a team."

The complaint also says HPD and RFMCD have "dramatically distinct organizational cultures," and while HPD "is governed as a democracy," RFMCD "operates as an autocracy" with its board of directors making divisional decisions.

The complaint explains that in mid-2010 WWMA began making plans to open an outpatient facility that would include urgent care, a surgery center, a rehabilitation center, clinical space and offices. The new facility is referred to as "Site 8."

NRD chose not to participate in that plan. WWMA first considered a location along Hwy. 35, equidistant from River Falls and Hudson. But, says the complaint, an outside consultant instead recommended that Site 8 be placed in Hudson, near the intersection of I-94 and Carmichael Road, within a few blocks of the HPD clinic.

River Falls agreed to proceed with the plans only if there was complete consolidation of RFMCD and HPD. The complaint alleges RFMCD insisted on consolidation because it feared it would lose its market share.

A consolidation committee was appointed, but discussions reached an impasse in early 2012 "because proposed financial models for a combined entity would have required the more productive HPD to subsidize the less productive RFMCD," says the complaint.

The complaint also says the RF division borrowed money without informing the Hudson division.

"The River Falls Medical Clinic has never sought subsidies and is as strong and stable as it has ever been," responded clinic President Dr. Chris Tashjian.

He added. "Our team approach offers productive value to our patients and has gained us local, regional and national recognition from Consumer Reports magazine and the Center for Disease Control."

The Hudson division wants to move ahead with a more modest version of Site 8 but can't without approval from the shareholders of all three divisions, according to the complaint.

"Because the divisions of WWMA appear to be going in separate directions, Site 8 is no longer being pursued," agreed WWMA President Tim Steinmetz.

He added, "WWMA has often evaluated collaborative business development exploration with the goal to provide greater access to care for all our patients."

Also, says the complaint, in May 2012 HPD entered into discussions with seven physicians and other healthcare professionals who worked for Baldwin Medical Group but wished to join HPD. But RFMCD, which operates a clinic in Spring Valley, informed HPD that it would block any attempt to hire the Baldwin professionals.

On a separate issue, when Dr. Kevin Hallman made known his plan to remain employed by WWMA but transfer from River Falls to Hudson, RFMCD attempted to block his transfer, and three River Falls doctors filed a civil lawsuit against him.

The parties attempted in September and October to mediate the dissolution of WWMA, but mediation failed. Therefore, Hartung, Stannard and Young are asking the court for an order dissolving the organization.

Judy Wiff

Judy Wiff has been regional editor for RiverTown’s Wisconsin newspapers since 1996. She holds a bachelor’s degree in journalism and sociology from UW-River Falls. She has worked as a reporter for several weekly newspapers in Wisconsin.