Physician Payments

Ambulatory Surgical Centers

San Jose Cardiologists and OB/Gyn Problems

The Sacramento Business Times reports that the physicians in Sacramento and El Dorado Counties have dropped 13% in the last five years. This is at a time when the population in the two counties has risen by 9.6%. The loss includes a drop of 113 primary care physicians or 14%. This is 1/3 of the total physicians that have left the area or retired. There are also no new young physicians coming into the area to take up the slack. Kaiser Permanente is doing well in the recruiting department. The new young physicians seem to like the salary aspect of a staff model group. Groups with fixed capitated incomes it is tricky to hire in-demand specialists. This may require the remainder of the group to take less in order to pay the in-demand physician more. The lack of new blood is also happening in the Bay Area due to managed care and the cost of living.

In Southern California’s Riverside County another contract has not been renewed causing 7000 seniors to choose their insurer or their physician. Secure Horizons has cancelled its contract with Riverside Physician Network. The reason is the problem between the physician’s use of Riverside Community Hospital. Community states it is losing money on the insurer’s flat per-patient monthly (capitated) fee and wants fee for service as is done by PacifiCare, the parent of Secure Horizons. Community cancelled the capitated contract and Secure cancelled the IPA. The contract will be moved to physicians using neighboring Parkview Community Hospital. Another entity, Riverside Medical Clinic, had its contract changed last year to only allow use of Parkview. The clinic may cancel its Secure Horizon contract this year because its physicians want the freedom to admit to both hospitals.

The San Francisco Business Times reported in its February 2, 2001 edition that Blue Cross has received a black eye for its negotiating stance of waiting until the 25^th hour. Several large companies have reopened their enrollment period so those caught in the Blue Cross squabble with Sutter can opt out of Blue Cross to keep their own physicians. In the biggest fear the insurance brokers are having second thoughts about selling Blue Cross.

As an aside, Blue Cross has signed an agreement with Tenet probably to keep some Bay Area Hospitals in the fold.

Brown and Toland IPA has dropped the 480 physician Valley Physician IPA which added $200,000 in profit to B&T. B&T is pulling in its horns to only its core business.

Michigan HMOs are fighting for patients. In order to lure them they are offering alternative medicine remedies. These include discounts on acupuncture, vitamins, nutritional counseling, and chiropractors. These programs do not cost any more administratively or more in premiums. Some hospitals have alternative medicine programs attached to their oncology section and some are fee-for-service to anyone.

Aetna’s decision to drop the take all or none provisions in their contracts seem to be, surprise! not working well. Aetna has left it to the regional managers to tell the physicians that this is no longer a part of the contract requirement. The managers have not done so and have told physicians they cannot get out of the all products contract even though it ended January 1, 2001. Physicians must give a ninety-day notice prior to the automatic renewal of the contract. By not allowing physicians to opt out of the all products Aetna is fraudulently keeping physicians in the program. I would hope that all IPAs and individual physicians with these contracts would drop the contracts effective in ninety days and make Aetna sweat.

UnitedHealthcare has decided to drop all HMO contracts in Nevada and turn them all over to NevadaCare. This leaves United with 50,000 PPO patients in Nevada. United is going to focus on insuring those large companies outside of Nevada that have employees in Nevada.

PacifiCare is reinventing itself. The company is adding PPOs and other healthcare insurance products as it tries to rebound from an 82% drop in net earnings. Top

In the preceding news sections I reported on the problems in Pennsylvania with rising malpractice premiums. A new article states that the price of insurance has risen 30%-50% over the past several years. This has forced physicians from the state or to reduce their premiums by not doing high-risk procedures such as obstetrics. The Hospital and Healthsystem Association has finally gotten the message and is now attempting to have the legislature reform the liability system. They still don’t understand that this is a separate issue from streamlining claim forms and transferring risk to insurers, a medical premium issue. Top

In an USA Today story it was reported that 30,000 lives and $1.5 billion could be saved by using the best practices in the ICU. This included the use of intensivist teams, standardization of who gets admitted to the ICU and how they are treated. The increased cost at the hospital to hire the necessary people to be in-house 24/7 would be at least equaled in savings in hospital length of stay. Yes, it might not be politic to do this but I can tell you from personal experience that it is a more efficient way to run an ICU.

CHW is laying off administrative personnel and restructuring and eliminating some of its regions to streamline care. The streamlining includes the loss of Mercy Sacramento that will fold into the Northern California Division. The organization has lost $317 million on operations. Top

Physicians are finally waking up that they are now not only healers but businessmen as well. In a February 4, 2001 New York Times article physicians are now turning patients over to collection agencies after non-payment within 30-60 days as do the rest of the business world. This may affect the patient’s credit but it may also allow the physician to have a decent cash flow. It is the norm when there is a finite amount of money, the "rich doctor" is always the last to get paid. If insurance companies are not paying in a prompt manner and it is not illegal to do so physicians are turning to the patient for payment. In California, Health and Safety Code 1379 mandates insurance companies and IPAs to pay promptly or be automatically hit with interest and penalties to the unpaid physician.

Physicians are now using their own ambulatory surgical centers (ASC). This trend was written up in the Denver Post but certainly applies nationwide. In my community there are two hospitals with their own surgicenters, one with physician participation and one without. There are also two and soon to be more physician owned centers. Those that own centers also usually have a fair market rental by the center for equipment owned by the physicians. These physician ASC owner users have no waits and are much more efficient than the use of hospital based surgicenters. These physicians may reap the rewards of entrapenurship but they also take the risks. Many of these are part of a full service orthopedic group practice with X-ray, CT scanners and MRI machines. These full service physician practices are extremely efficient for both the physician and patient.

The San Jose Business Journal reports the San Jose Medical Group has lost its cardiologists. They had contracted with the Northern California Cardiology associates but were paying them below the breakeven point. The cardiology group wanted Medicare rates and an exclusive contract but San Jose Medical was paying Medicare less 25%. The cardiology group has gotten another contract but is with the struggling Santa Clara County IPA. The San Jose Group needs to find a new cardiologist group soon or hire their own, both of which is unlikely given the pay structure.

The San Jose Business Journal reports that a group of 29 OB/GYNs have formed a Medical Group and then dropped the Santa Clara County IPA. They have also dropped all other contracts prior to the IPA. Santa Clara IPA has 130,000 members 750 physicians and no OB. The group is now in the process of negotiating contracts with health plans directly. The group also cancelled the contract with the San Jose Medical Group but that group has some OBs of their own. The OB group believes they can increase reimbursement by 15% by cutting out the middleman, IPA. The contract break will not affect ongoing care but will deny new patients. Blue Shield states they have no plans to deal with new group. At the same time Blue Shield states that if the IPA doesn’t get more OBs, they are in violation of their contract and they may lose the Blue Shield contract.

The Indianapolis Star reported on a medical group that has been serving the community since the late 60s. They have never advertised because they don’t need to. They have too much work already. They take all comers, insurance or not. They have four waiting rooms and no physician offices. The offices have been turned into examining rooms and diagnostic rooms. The group features one stop shopping. They have a radiology suite, fetal monitoring, bone densitometry, and almost anything else you could name. The group consists of nine physicians and a staff of 50. Since there is no nearby hospital the group also doubles as a de facto emergency room, treating heart attack and trauma. The clinic continues to increase by about 200 new patients a month. The clinic continually outgrows its space and always needs more. Top

San Diego Hospital Bed Count

The San Diego Union Tribune reports that first there were too many and now not enough beds in San Diego County. In the past five years 1000 beds (13.4%) and four hospitals are missing. In the same time frame despite managed care the patient discharges have increased 6.2% with a LOS increase of 2.7%. The 13.4%decrease is even more, 16.6%, if only the staffed beds are counted. This discrepancy is at the heart of the matter. UCSD states there are still too many beds if all beds are counted but not enough if only the staffed beds are counted. The lack of staffed beds is blamed on the lack of nurses nationwide. The article does not explain the lack of nurses stem mainly from the uncertainty of the profession due to managed care. The population of the county also is increasing bring more of a crisis situation to the area. Top

St. Luke’s hospital, after suing Sutter for antitrust, was offered money and a partnership into the Sutter system. They happily agreed or were going to go out of business. Now San Francisco is considering whether or not the merger will be detrimental to the city’s health system. St. Luke’s has historically served, along with S. F. General, the south of Market indigent population. The city is afraid that with the merger this may change. The problem is the city has never paid St. Luke’s for its care nor has ever been helpful to them in the care of these patients. From a legal perspective the city has no say in what any hospital does. Top

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DISCLAIMER: Although this article is updated periodically, it reflects the author's point of view at the time of publication. Nothing in this article constitutes legal advice. Readers should consult with their own legal counsel before acting on any of the information presented.