A multimillion-dollar deal is brewing between two local health care companies that could someday result in Lawrence being known as the “knee and hip replacement capital of the Midwest.”

No, it is maybe not the best moniker for the convention and visitors bureau, but it could result in big business, and might end up being a key development in Lawrence’s changing health care market.

Leaders with Lawrence Memorial Hospital and Lawrence-based OrthoKansas confirmed this morning they are in serious discussions about partnering on a new state-of-the-art orthopedic facility that would be built in Lawrence but designed to serve patients from throughout the state and beyond.

“We want to take the clinical expertise that already exists here, and create a partnership that better leverages that into a regional delivery system,” said Russ Johnson, president and CEO of LMH. “There is every reason to think Lawrence could become a true destination for orthopedic care and sports injury in the next 20 years.”

LMH and OrthoKansas hope to finalize a deal by the end of summer. The deal could involve LMH purchasing OrthoKansas, but Dr. Doug Stull, president of OrthoKansas, said he didn’t think that was likely. Instead, some sort of partnership is more likely. LMH and OrthoKansas are characterizing the talks as an exploration of a possible “affiliation.”

The new facility would be a “regional center of excellence” that would provide services in hand, shoulder, elbow, foot, ankle, hip and knee reconstruction. It would be a one-stop shop for surgery, therapy and imaging services. The center also would likely include a sports performance and and athletic training program that would focus on high school and collegiate athletes.

The two parties haven’t decided on where the facility should be built. But in my conversation with Johnson and Stull, it sounds like they are not necessarily looking to build it near LMH’s main campus at Third and Maine streets.

“It needs to be a place where the region can access us,” Stull said. “If you live in Ottawa or Hays or Atchison or any number of other places, how do you get there easily?”

The potential deal between LMH and OrthoKansas comes at an interesting time. As we reported in December, KU Hospital has reached a deal with Dr. Jeffrey Randall to open a new orthopedic practice in Lawrence. Randall is a sports medicine doctor who previously was with OrthoKansas. The deal is significant because it marks the first time KU Hospital has entered the Lawrence market in such a big way. Importantly, KU Hospital made it known as part of its announcement that is is “working with other health care organizations in Lawrence to identify collaborative practice opportunities.”

That makes this potential deal between LMH and OrthoKansas about more than just knees and hips. Johnson confirmed that if LMH can successfully complete this deal with OrthoKansas, it should send a message to the broader medical community that LMH also is serious about partnerships and knows how to get them done.

“I think Lawrence is a fantastic market and it is very likely that as a community we’ll see other people enter this market,” Johnson said of other health care providers. “I think it is important for them to know they can enter it in a partnership way with us, and we can build a strong alliance as the local community hospital and serve the community in a very good way.

“Or, if that is not their interest, they may just want to come in and compete.”

Johnson said it is not yet clear what type of relationship KU Hospital’s new Lawrence facility — called the Sports Medicine and Performance Center — wants to have with LMH. Johnson said LMH is open to working with the new practice.

In this business of finding partners, the stakes are high for LMH. Think of it this way: The hospital receives some of its business from patients who just come through the door of the emergency room. But it sees a lot of its business from physician offices that refer patients to LMH for a scheduled procedure or service. If several of those physician offices become affiliated with KU Hospital or other hospitals in Kansas City or Topeka, LMH could be at risk of losing some of that referral business.

Johnson didn’t get into that level of detail with me, but did acknowledge that the search for partners is a high priority for the hospital, and that such partnerships will become more critical as the industry changes.

“It is a new era in health care,” he said.

It could be a good one for consumers. If multiple hospitals from Kansas City and elsewhere decide they want to be players in the Lawrence market, that could mean other new facilities, new state-of-the art equipment, and maybe even competitive pricing practices.

Stull said he thinks the potential new orthopedic facility could be a good example of what local providers and LMH can offer to compete with the larger Kansas City companies.

“I know there are some people in Lawrence who think seeing a doctor in Lawrence isn’t good enough, and they think they need to go to the city,” Stull said. “I want those people to stay in Lawrence. I’m confident this alliance will show them that if they had a doubt about where to go, they won’t have a doubt anymore.”

As for the near term, OrthoKansas will continue operating at its facility at Sixth and Maine Streets, which shares a building with the Lawrence Surgery Center. OrthoKansas has about 60 employees and has offices in Lawrence, Leavenworth and Holton.