Sonoma California Hospitals in
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.
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.
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.
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
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
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
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.
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.
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
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