April 1, 2001 News

Sonoma California Hospitals in Financial Peril

Five small hospitals in rural Sonoma County are having significant financial problems. These hospitals have been harmed by HMO cost cutting, the uninsured, and no leverage when dealing with insurers. The five hospitals are Sonoma Valley, Petaluma Valley, Healdsburg General, Palm Drive and Warrack.  Healdsburg has recently closed its ICU and maternity as well as laid off 65 of 300 employees and reduced bed size from 43 to 15.                                Top

Sonoma County MDs Cry Help

The physicians of Sonoma County, including Permanente physicians, have placed an advertisement in their local newspaper asking the public to help increase Medicare, MediCal and private reimbursement. The ad states the reimbursement in Sonoma county is 25% below the national average and 35% below what is being paid in the northeast. Top

Cal Pacific to Consolidate Acute Care

California Pacific has decided to consolidate their acute care.  The problem is they have not decided where as yet. The Board is still considering both the Davies and the California sites.  Neither community wants to loose their hospital and so the city may become involved.  The California site is more centrally located and needs more seismic upgrades.  The Davies area has already started to emphasize its nursing care mode. The campus not chosen would lose it's trauma center, ED, surgeries and other inpatient care.  The chosen area would have underground parking and three office buildings of nearly 500.000 sq. ft. Top

St. Mary's to Cut Services

CHW's St. Mary's Medical Center in San Francisco is closing four services.  One is to move AIDS patients with dementia to a long term facility.  Others are the shutting of a psychiatric outpatient program, a psychology clinic, a pediatric clinic, and its linear accelerator. Each service lost about $250,000 last year. Four years ago St. Mary's closed its OB program. The Health Commission is to determine whether St. Mary's as with St. Luke's potential affiliation with Sutter will harm the city's health care.  The Commission carries no weight or force of law but is only a forum to air grievances.

Contracting

Sharp Healthcare has ended contracts with some Prudential Plans. They have terminated their contract with HMO and Point-of Service plans due to low payment. The contract ends on April 1 and effects about 3500 consumers.

Mercy Physicians Medical Group and Secure Horizons have agreed on a new contract in San Diego. The contract was agreed to with higher physician rates when Scripps offered Secure Horizons lower rates.

Colorado Springs largest group and PacifiCare have severed their contract as of June 30 and will effect 280 physicians and about 22,000 people.  PacifiCare will now go after individual physician contracts. The present contract is a capitated one and the new one that was rejected was a discounted fee-for-service contract but required the use of only one hospital and most of the IPA does not use that hospital. The individual physician offering will also be fee-for-service. No details were available regarding the hospital usage.

Humana plans to pull its managed care plans out of rural Colorado leaving about 22,000 people without coverage.  The only other managed care plan in one county is 40% more expensive and has no contract with a local hospital.

Aetna and Lehigh Valley Hospital in Allentown Pennsylvania have severed relationships. Approximately 10,000 patients switched insurers to stay with those physicians affiliated with the hospital.                        Top

Marin County Hospitals Offer Loan Program to Attract New Doctors

Marin General and Novato hospitals, both Sutter affiliates, along with Marin IPA are offering  low cost three year loans  to up to six new doctors to help cover practice start-up expenses. They are also working with a home brokerage firm to offer home loans with reduced escrow, closing costs and title fees. The average home cost in Marin County is $600,000. Marin, like many other California areas, are having physicians retire early with no new people to replace them.        Top

Silicon Companies to use E-mail for MD Visits

Six major silicon valley companies Cisco, Adobe, NEC, Oracle, Cadence Design and one unnamed company will start using E-mail for employees to communicate with their physician's offices.  If the problem is easy, advice will be given and/or an on line Rx given.  If it's a more complex issue an appointment will be arranged.  The physician will be paid $20 for each E-mail visit. Privacy is thru encryption of the parties and the message. The program will be evaluated in 6-9 months for patient satisfaction, absenteeism and costs.  Top

Placer County Invasion

There is a population surge in Placer County and this is generating an invasion of physician groups into the area.  Kaiser, Sutter, Mercy and U.C. Davis are all increasing their presence in the area with more physicians, clinics and equipment. Kaiser enrollment grew by 5.5% last year alone. That is double the growth in the rest of Northern California. Sutter Roseville Medical Center had a 25% rise in admissions, births are up 16% and ED visits up 9%. A new Sutter clinic building start has been delayed several months. and a new Breast Center will open in April. UCD has no hospital but rotates physicians into the area with the hope of hospitalizing them at their hospital. Mercy is pushing its Medicaid and rehabilitation health programs. Ain't change grand?

In another story the Sacramento Business Journal states that Sutter has attempted and failed to purchase two hospitals along Highway 50.  They are Marshall Hospital in Placerville and Carson-Tahoe Hospital in Carson City. Top

Medical Staff News

Physicians in Florida's Indian River Memorial Hospital stand together when asked to sign exclusive contracts to keep their hospital admitting privileges. The hospital administrator complained about having to compete against its own physicians for outpatient business. He also stated after the 106-0 vote against the hospital exclusive contract proposal that the board will listen to all input before making a decision. The medical COS stated that physicians are used to credentials based on quality and not hospital economics are do not accept that notion. The Board Chair stated that the medical staff will provide a counter-point to the administrator's position.

JFK Hospital in Edison N.J. has threatened to cancel admitting privileges for physicians who keep patients too long. The argument centers on the question of whether a longer length of stay means a poorer outcome. This is known as economic credentialing.  The hospital has guidelines for length of stay that were determined by the physicians and GE Medical Systems. The outliers, those who average length of stay exceeded expected by greater than 30%, and were up for a two year re-appointment were sent letters signed by the hospitals chief medical officer stating they would only be reappointed for 30 days. These physicians must submit a performance improvement report that if accepted will lead to an additional three month appointment. The physicians have never seen any length of stay guidelines nor told which of their patients stayed too long. The doctors have each chipped in money to hire an attorney to fight the hospital ruling. The N.J. Hospital Assn. states they know of no other hospital threatening to kick out physicians for too long a length of stay. What do you think? Is economic credentialing a legitimate quality issue?   

Article on Economic Credentialing

In the recent Unique Opportunities magazine there is an interesting article on economical credentialing.  the name of the article is Due Process or Professional Assassination. The article looks at the peer review process from the economical credentialing aspect.                  Top

PacifiCare Drops Fresno's St. Agnes and Matrix MD

PacifiCare has cancelled the contract with St. Agnes and Matrix, the hospitals physician group.  This was a based on a report by the State's Department of managed Care. The report stated that an audit found problems including inadequate staffing, lack of expertise and failure to separate fiscal and administrative functions.  PacifiCare did not give any notice and did not allow any time for the parties to cure the alleged defects. Top

Doctor News

In Houston a large doctors group has broken up.  The Methodist Associates of Houston IPA decided to shut the doors while they still had money to pay their debts. They stopped seeing patients in December but are still paying the claims. A Houston consultant stated that the biggest problem she sees with hospital IPAs is the lack of any emotional attachment by the physicians to the product.

Dr. Corlin, the president-elect of the AMA testified in Congress that when he saw a patient for GI bleeding he had to read thru multiple pages of notes by prior physicians most of which were the same.  The redundant and non-helpful notes were to make sure the physicians would get paid the highest amount allowed for their work.  Corlin believes this paper work is ridiculous.  Of course Medicare does not agree.  They want to make sure they pay out the proper amount even if all are gaming the system.

An article in the Cleveland Plain Dealer rehashes the Medicare PRO decision to review cases sent to it but keep the results private unless the physician gives permission to release the results. The article states that since the results are not returned to the complainant the PRO is not used. The question posed in the article is should the federal government continue to pay billions of dollars a year into a system that essentially nobody uses? The PRO points out the process is not to punish physicians but to improve the quality of care overall.  If errors are not known, no improvement can occur.

A seven year old central Florida IPA owned by HCA and the physicians is disbanding after HCA decided to pull out of the entity. The physicians paid an initial fee of $1,250-$2,500 when the entity was formed.  They would need to pay annual fees of about $500- $1,000 to keep the organization going. Some of the doctors have received contracts for up to 25% less than they have been receiving.  They state that if they sign all the contracts they would not do well.

HMO News

The California Association of Health Plans has issued a report to counter the information the CMA had stated regarding the cause of IPAs going under. The CMA stated that the per capita payment in California is $29-$36 per month. The HMO report states the payment is much higher at $35-$50 per patient per month.  They also state that HMOs in California spend 40% of the healthcare dollar on physicians versus 29% nationwide.

CalPERS plans to drop three plans in order to increase competition and hopefully lower price.  The three plans on the block are Aetna, Lifeguard and Cigna. In it's new bidding round HMOs wanted payment increases of 15%-18%. CalPERS is now beginning a new round of negotiations with the remaining carriers.

In Ohio the HMOs are starting to ask for high co-payments for oxygen and wheelchairs.  Anthem HMO now requires subscribers to pay 20% of the cost, the same as traditional Medicare.

PPOs are now the managed care of choice in the US.  The cost differential between PPO and HMO is now minimal and PPOs give far greater choices. In 1995 PPOs had 1/2 the number of patients as HMOs.  Now, the numbers are reversed.  Approximately 100 million have PPO coverage and 90 million have HMOs.

Kaiser is leading the way with treating nurses with respect.  They have started a program to guarantee nurses a 40-hour work week.  This means no overtime and no canceling shifts. The nurses union, of course, is not all happy with the idea.  They also want more money and improved working conditions with more say in patient care.

The Massachusetts hospitals are raising rates for HMOs.  The largest physician and hospital group in the state may soon get a 25-30% raise from Harvard Pilgrim HMO.  They also won significant increases from two other HMOs last year.

Indiana HMOs are also in trouble. Approximately 1/2 of the state's HMOs lost money last year. The HMOs believe business will pick up this year with the economic downturn and business looking for ways to cut costs. Of course with more enrollees there may be larger payouts for prescription medicines and other high ticket items.                        Top

Pennsylvania OB Problem

An article in the Philadelphia Business Journal states the liability crisis in the state may lead to less OB care. Pennsylvania leads all states for malpractice award payments per physician and is second in per-capita malpractice payouts.  Pennsylvania has no malpractice reform.

Florida Hospital Follow-up

Several months ago I reported on a bizarre story regarding two Palm Beach hospitals owned by one entity.  The hospitals were losing a significant amount of money, $2 million per month, and the parent company wanted to close one hospital.  The attorney general stepped in and sued to keep hospital open, but did not say how it was to be funded. Now the issue has been settled.  Intercoastal, the parent company, will sell both hospitals to the same buyer with the caveat that both hospitals must be kept open for at least five years.                                  Top

Archive

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.

Copyright 2000 Allan Tobias MD JD, Altoby@aol.com
This page last updated March 31, 2001