A dispute between Children's Minnesota and doctors caring for its fragile premature newborns has spawned a lawsuit and a professional divorce that could undermine neonatal intensive care in the Twin Cities.

Doctors with Minnesota Neonatal Physicians are leaving Children's Minneapolis hospital at the end of the year and instead will staff expanded neonatal intensive care units (NICUs) at Maple Grove Hospital and North Memorial Health in Robbinsdale. The move came after an unsuccessful attempt by Children's to switch them from private practitioners to hospital employees.

Children's top executive said the attempt was necessary to become more cost-efficient and improve the quality of care amid a national movement toward "accountable" medical care.

The doctors said they were being asked to give up too much control over how they practice and that Children's didn't adequately prepare for the consequences of losing the medical group that helped build its neonatal program.

"I don't think you can replace a whole group, at least not this group, at this point in time," said Dr. Jeanne Mrozek, medical director of the practice.

Children's chief executive, Dr. Marc Gorelick, disagreed. He said the size and reputation of Children's Minneapolis NICU will make it attractive to new doctors, who will work in an employee model that seeks to achieve the best outcomes at the lowest possible price.

"We're setting ourselves up for the best possible future," he said.

Neonatal intensive care involves the treatment of infants born prematurely, before 37 weeks gestation; born at low weights, less than 5 pounds, 8 ounces; or born with serious illnesses or congenital problems.

Prematurity had been a growing concern in recent years because of more multiple births and more high-risk births involving mothers at older ages or with chronic conditions such as hypertension. Those numbers have leveled off in recent years. Even so, one in 10 births in Minnesota is premature.

NICUs at the Children's hospitals in Minneapolis and St. Paul and the University of Minnesota have generally had above-average outcomes in preventing deaths and disabilities. But Children's did not list among the 50 best neonatal hospitals in the most recent U.S. News and World Report rankings, despite having one of the largest programs in the Midwest.

"We're good, but we're kind of in the middle," Gorelick said. "We want to be the best. Our patients deserve the best."

A fragmenting of neonatal intensive care among multiple hospitals could spell problems, though. Multiple studies suggest that hospitals with higher volumes of NICU patients tend to have better patient outcomes. But volumes are likely to go down with more hospitals competing for high-level NICU care.

Gorelick said volume matters most in specialty areas, such as neonatal surgeries requiring the use of heart-lung bypass equipment, and that Children's will retain its expertise in those areas through its network of surgeons and specialists who provide those procedures.

Children's has reached an employment agreement with Associates in Newborn Medicine, the private practice group that staffs Children's NICU in St. Paul. Both sides in Minneapolis said options remain that could allow the current neonatologists to return on a limited basis.

"We've made that offer to continue to provide service here because it's our home," Mrozek said. "We built it. We love it. But it's a little contentious right now."

Case in point is a lawsuit that the group practice filed earlier this summer against Children's, accusing one of its board members of telling people at a social gathering that the neonatologists are "crooks" who have been accepting kickbacks in exchange for sending patients to specialists.

The board member allegedly accused pediatric urologist Dr. Hossein Aliabadi and neurologist Dr. Mahmoud Nagib of paying kickbacks. Both doctors joined in the lawsuit against Children's.

Aliabadi said he has had patients referred to him by the neonatal physicians, but never in exchange for kickbacks. He criticized the Children's leadership for pushing their neonatal physicians to another hospital and disrupting a service line in neonatal care that is critical to the health system's financial stability.

"Why would you screw with something that yields 40 to 45 percent of your income?" he asked.

Gorelick said the fact that neonatal intensive care makes up so much of Children's financial picture necessitated this switch, whereas other doctors are being allowed to remain in private practice.

Changes in health care financing also influenced the switch, he said, because hospitals are being paid more for the value of the care they provide, and not just the amount. As a result, Children's needs to have a more direct relationship with its doctors so they can use evidence-based methods of care to ensure the best outcomes with the least amount of financial waste, he said.

Health systems such as Mayo and HealthPartners employ their physicians directly. Gorelick said many top pediatric hospitals employ their NICU doctors as well.

Mrozek said her group's stand will be costly, as the doctors will ultimately lose income from the switch. Maple Grove operates a level III NICU, meaning that the doctors might not be able to perform as broad a range of services as they can at Children's top level IV NICU in Minneapolis.

Adding the Minneapolis physicians was an ideal opportunity for North Memorial and the Maple Grove Hospital, though, which since opening a decade ago has become the second-busiest in the state in its number of deliveries.

"As more families choose our health care system each year, it is important for us to continue to grow and develop our neonatal services," said North Memorial spokeswoman Katy Sullivan.

Some doctors didn't wait for the fallout. Dr. Lisa Allred left the Minneapolis neonatal group after a year because of the threat of losing her independence. She now provides neonatal care in Traverse City, Mich.

Aliabadi said some specialists have left as well. Others have expressed concern that Children's won't be able to replace the outgoing neonatologists who are like superstar athletes in their field.

"You can't just replace a [hockey legend Wayne] Gretzky," he said.

Jeremy Olson • 612-673-7744