ABLEnews Extra

                    HMOs: Hazardous to Health

     On August 27 through August 31, the Los Angeles Times reported on
     its seven-month investigation of California HMOs. Excerpts from
     the series of particular interest to persons concerned with the
     impact of managed care on patient care are provided below.
     (Ellipses have been omitted to facilitate reading.)

     [N.B. The entire series may be ordered by calling Times on Demand
     at 800-788-8804. The following file may be freq'd as MC50829.*
     from 1:275/14; and other BBSs that carry the ABLEFiles
     Distribution Network (AFDN) and ftp'd from ftp.icdi.wvu.edu on
     the Internet. Please allow a few days for processing.]

San Diego cardiologist William Cerretto seemed to have it all: money,
prestige, and a thriving medical practice in a beautiful city.

Then FHP Inc. pulled the plug.

Cerretto's practice has been hemorrhaging since the giant health
insurer pulled his contract with him in February. FHP switched his
patients to another cardiology group willing to work more cheaply.
Gone were 3,000 patients--and half of Cerretto's income.

"The doctor won't be in until 2 PM," said a receptionist in Cerretto's
office one recent morning. "He has no patients until then."

Cerretto faces foreclosure on the two-story, four-bedroom home that he
had remodeled. His Mercedes is for sale. He's been talking to
bankruptcy lawyers.

"This is destroying me," he said. "I feel like I'm not of value
anymore. You have trouble dealing with the respectful way that
patients still think of you, and the contrast of what you're being
told by the health plans. Inside, you feel worthless."

From medical offices in musty Mid-Wilshire high-rises to the gleaming
towers of prestigious teaching hospitals, many California physicians
share these feelings of panic and powerlessness. And with good reason.

Doctors who once topped the medical pecking order have been supplanted
by increasingly powerful HMOs which, along with a handful of
sophisticated employers, now wield tremendous influence over health
care. Doctors who once thought of patients as their own now find that
it is the HMOs that control these "covered lives," as patients are
known in the jargon of managed care.

"We see bankruptcies all the time and we see doctors closing their
offices, walking away, and getting nothing for their practices," said
Arthur Shorr, a Woodland Hills health care consultant. "Today, in
Southern California, that is not a doctor who does not appreciate that
managed care is king."

"Physicians feel there is an unlevel playing field, that they have
both hands tied behind their backs," said Lonnie R. Bristow, a San
Pablo, CA internist who is president of the American Medical
Association.

Nowhere in the country are HMOs as significant a force as they are in
California, home to some of the nation's biggest health care plans:
FHP, Foundation Health, Health Net, Kaiser, and Pacificare. The growth
of HMOs over the last decade--to the point where 12 million
Californians are members--has profoundly affected the state's 100,000
physicians.

* Demand for physician specialist is shrinking rapidly as HMOs tightly
  restrict the use of these highly trained doctors. Income in some
  specialties--cardiology and orthopedics, for example--has plummeted
  30% to 40% in just the past year. Many doctors are working longer
  hours or taking temporary jobs in other states to supplement their
  incomes.

* In an experience once unimaginable, doctors are being fired or laid
  off in cost-cutting moves by HMOs and affiliated medical groups.

* Solo practice is facing extinction in Southern California. Financial
  pressures are forcing scores of independent-minded doctors to sell
  their practices and join larger medical groups.

Many doctors who sell their practices are in for a shock: the value of
the business they built may be far less than they thought.

Seeking to escape managed care's impact, doctors are leaving
California for destinations such as Arkansas, Idaho, Montana, or
Oklahoma, where HMO enrollment is still scant. More than 2,600 doctors
gave up their California licenses last year, according to the
California Medical Board.

* Scores of doctors are retiring early or leaving medicine to start
  new careers as entrepreneurs, lawyers, and medical administrators.

California has long been a magnet for some of medicine's best and
brightest, lured her by good weather, top-notch medical schools, and
plenitude of patients.

In California's biggest cities, roughly 60% of doctors are
specialists. Yet already HMO pioneer Kaiser Permanente says that 57%
of doctors in its Southern California region are primary care doctors.

So what was once an abundance of riches in California has become an anachronism in the era of
managed care. 

In any other marketplace, the redundancy gets squeezed out," said Ian
Morrison, president of the Institute for the Future, a Menlo Park
think tank.

In fact, the shrinking of the physician work force in California has
begun.

"Three or five years from now, there will be specialties where it will
not be possible for people to continue to make a living," said Raymond
Shultze, former director of the UCLA Medical Center.

Everywhere they go, doctors are confronted with similar gloomy
forecasts. The combination of financial loss and the psychological
impact of seeing much of their authority usurped by insurers has taken
its toll.

"You have an angry, demoralized profession feeling confused and
threatened," said Stanley Poppelbaum, a La Jolla medical care
consultant. "I can't imagine that it's in the best interests of
patients."

The mental health managed care industry has estimated that it will
need no more than 25% of today's psychiatrists.

Already, some medical groups have been trimming their networks of
doctors, citing cost-cutting pressures from HMOs. Hundreds of
specialists in Northern California were handed pink slips this year by
Hill Physicians Medical Group, a large medical group management firm.

For Joseph Martel, a Rancho Cordova ophthalmologist, the bad news came
in a form letter from Hill's board of directors.

Martel, who heads the Martel Eye Medical Group, says he felt betrayed
by Hill's action. "These HMOs came into our community and used our
name to recruit patients," he said. "Then when they had grown to a
substantial size, they eliminated us."

The episode is significant because the eye doctors are fighting back,
having filed an antitrust lawsuit that legal experts say could
foreshadow future skirmishes between doctors and managed care
organizations.

Rosemary Kelly, a Sacramento lawyer for the eye doctors, said the case
raises questions about how much control a managed care firm can wield
over patients and providers.

"Doctors can't get on these HMO panels unless they sign these
contracts," she said. "But once you sign them, have you given up all
your rights?"

The Martel group's problems demonstrate the precarious and conflicting
situation that many doctors describe. They decry some of the key
cost-saving strategies of HMOs, such as "gatekeeper" primary care
physicians who must authorize diagnostic tests and specialist
referrals.

Yet, doctors who do not accept HMO contracts--and their numbers are
dwindling--are watching their practices erode as employers push more
workers into HMOs and as enrollment in the ranks of Medicare HMO
members continues to grow.

But accepting HMO patients is no guarantee of financial success for
doctors. Many who say they reluctantly accept HMO patients complain of
being caught in a Catch-22. They need HMOs to channel patients to
them, but the payments they receive are getting so stingy that many
doctors say the money does not cover their overhead.

Doctors typically receive a set fee per month for each HMO member who
signs up with them. In Southern California, primary care doctors are
receiving capitation payments of as little as $8 per member--about the
lowest in the country. In theory, the doctor's "profits" on healthy
patients are supposed to more than compensate for "losses" on sick
patients who may require lots of expensive care.

The impact on doctors can be profound. By most accounts, the most
frustrated group is specialists in their 50s or 60s who are unwilling
to adopt to the startling changes taking place in medicine.

Many of these doctors resisted signing HMO contracts for years, and
now find themselves locked out of the health plan networks. As more of
their patients are pushed into HMOs by employers, their practices are
in decline.

Before long there may not be a place in medicine for the Wayne
Nishigayas of the world.

Nishigaya, 51, has been practicing family medicine in Anaheim for more
than two decades. But his once-thriving practice is now teetering on
the brink of failure. Nishigaya has watched with apprehension as the
six other family doctors in his office building have retired early or
sold their practices to join large medical groups in Orange County.

Nishigaya says his practice may not last more than another few months.

He has 3,000 HMO patients in his practice. The health plans pay
Nishigaya an average of $10 per month for each one. Patients typically
are required to pay $5 or $10 per office visit, although some plans
require no co-payment.

"But I can't even put the patient in the room for $15," Nishigaya
said, explaining that the costs do not allow him to earn a profit on
an HMO patient.

"The only way to be profitable is to have a very large population of
people who are very healthy or to get lots of patients and then save
money by denying them access. That is what a lot of the big medical
groups are doing," he said.

But, said Donna Roth, Nishigaya's office manager for two decades, "Dr.
Nishigaya is not the kind of doctor who says,  This shot is costing me
money, so I won't give the shot.'"

The net result is that he is losing $7,000 a month on his HMO
clientele, a figure only partially offset by the higher fees he
receives from patients with traditional insurance and those who pay
cash.

Others have advised Dr. Nishigaya to accept more HMO patients, spend
less time with them, and cut back on some services.

"But I'm just not ready to alter the way I practice," he said. "It's
hard for me to say,  This is an HMO patient and I have to take care of
them differently.'"

For the first time, he is seriously considering getting out. "I
thought maybe I could sell Twinkies," he jokes.

"I've been in family practice for 25 years," he said on a recent
afternoon. "The first people I saw today were a couple of longtime
patients, and I really feel that they need me. I have a purpose and I
really accomplish something. Can I give that up?"

Nishigaya's contention that the cost-conscious practices of HMOS force
doctors to give less care and compromise their professional standards
is disputed by the managed care industry.

Doctors in solo or small practices, in the HMOs' view, are dinosaurs
who are failing in managed care because they have not adapted to it.

Doctors who are less satisfied with managed care are finding, that as
HMOs grow more powerful, speaking out against them can be hazardous to
a physician's professional health.

Many of the physician who agreed to be interviewed by The Times for
this series asked that their names not be used. They repeatedly
expressed fears of reprisals by HMOs or managed care medical groups.
"They'll drop me from the network if I say anything against them," was
the repeated refrain.

Indeed, those fears may speak the loudest to the waning power of
physicians. Doctors not long ago were treated like gods by their
patients. Now these same doctors fear losing their jobs for speaking
their mind.

[Doctors' Authority, Pay Dwindle Under HMOs, David Olmos and Michael
Hiltzik, Los Angeles Times, August 29, 1995]

CURE Comment:  When speaking out against HMOs' care-cutting has become
               "hazardous to a physician's professional health," not
               speaking out managed NONcare is hazardous to the health
               and survival of patients.

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