January 1, 2002 News

Malpractice Premiums

The Fall of Managed Care

Physicians

Hospitals

Malpractice Premiums

Utah's is joining the rest of America by getting major increases in their malpractice insurance premiums.  Approximately 80% of the state's physicians are insured with Utah Medical Insurance Association, a doctor owned insurance company.  The association has announced a 35% premium increase for the coming year.  Does this large increase have anything to do with either the Association's stock market losses or the increase in law suits that corresponds to the public's distrust of managed care? 

The West Virginia malpractice fiasco is having an effect on the medical students.  A smaller percent of this year's crop of students are applying for the residency slots in the university.  The students know about the provider 2% tax that is not found in other states.  They know about the malpractice situation that will force physicians from doing and teaching high risk procedures.  

In Pennsylvania the malpractice crunch hits 1/1/02 with no carriers for physicians.  This will close trauma and emergency rooms around the state.  The Governor is finally waking up and asking the legislature to take care of the problem but it is too little, too late.  Bye, bye ED coverage and patient care in general until tort reform comes to the state of plaintiff's attorneys.     

Not to be left out, Florida is joining the fray. How does an OB/GYN in practice for five years pay a malpractice premium of  $175,000 per year.  Answer, they can't.  This is the approximate premium for OB/GYNs in Broward County, Florida and is the highest in the nation.  There was a recent meeting between physicians, medical insurance companies, state legislators and the Florida Medical Association.  Most of the physicians want tort reform, which the legislators aren't willing to do.  When one physician called for a strike, the moderator who is the vice president of the FMA shot him down.  A member of the legislature who is also a trial attorney does not think tort reform is necessary, only insurance reform.  There is now only one Florida company selling liability coverage in the state. The FMA is proposing changes in the process but this will do nothing to the amount of money paid out by juries.  It is interesting that Florida physicians are better off if they go bare.  Florida does not require insurance but the hospitals and HMOs do or at least require a $250,000 bond to self insure.  The self insurance means that the award will be limited to that amount, since anything much over will result in bankruptcy for the physician and no money for the plaintiff.  I believe strongly that no legislator will listen to the physicians until the physicians stop seeing patients.  This will cost the physicians money but they must stop seeing or operating on any elective patient.  They also should not be made to pay the huge prices for liability insurance but self insure instead.  This will cut back all cases since if there is no deep pocket for the attorneys, they will not take the cases.          Top

The Fall of Managed Care

In an interesting article the East Bay Business Times states that employers blame HMOs for health system problems.  About 70% of business owners supported a plan of a fund that would cover all residents if their employees were guaranteed coverage at a lower cost. This is a split type of socialized medicine. The survey showed 76% of businesses believed HMOs decreased health care quality and 92% complained about the large premium increases. 

Scripps Clinic had set a goal to be rid of all capitated contracts by the beginning of 2002.  They found out they were not Stanford, the institution that was successful in dropping all their capitated contracts.  Scripps got rid of some but not all.  They used as an excuse that some employers had already made commitments to HMO capitated arrangements.  They did not have the intestinal fortitude to stand by a publicly made decision. Blue Cross & Aetna have contracts with the clinic that run through 2002, so they could not be changed.  Hopefully they will drop the capitated plans when the contracts expire.  

Some HMOs are more political than others. California's Governor has issued $204 million in 501(c)(3) bonds for Kaiser Hospital Assistance.  This is to provide low cost funds for building clinics and surgical centers.  I wonder how many other non-profit institutions could get these funds.   

In an end of the year about face Health Net has agreed to re-open its Medicare HMO plan in San Mateo, California.  It needs federal approval to do this and this will not come for several months.  If the 2800 people the decision effects want secondary coverage during that time, they will need a Medigap plan.  The problem was contract negotiations between the HMO and the local hospitals and physicians.  The HMO is also asking the feds for permission to add generic only prescription coverage to their San Francisco enrollees.  

Secure Horizons, the Medicare HMO of PacifiCare has changed its rules.  They will require co-payments for infusion chemotherapy ranging from $25 to $550 per outpatient treatment.  This has caused most of the oncologists in California's South Bay to resign from the HMO.  They are sending letters to their patients stating they will no longer see Secure Horizon patients and request the patients either change HMO, switch to another physician or go to regular Medicare.  One physician group will stay in and work out a payment schedule.  Another one will send the patient back to the IPA to find a different solution if the patient can't pay for the medication.  These physicians are well meaning but do not understand that if they remain in the IPA and therefore the HMO they are bound by contract to care for the patients. Top

Physicians

The hospitalist trend continues.  There are currently about 5000 today but there will be 20,000 by 2010.  The hospitalist takes care of the outpatient physician's patients while hospitalized and is paid a salary by either the hospital or a physician owned company that supplies the physicians.  The current income for hospitalists is $150,000 compared to about $130,000 for internists.  Many of the best internists are leaving the rigors of practice for the standard hours and more challenging work in the hospital.      

In Palo Alto, California the Clinic is attempting to hire 30-40 new physicians a year for the next ten years.  The problem is the physicians will not come there due to starting salaries of about $120,000 or more accompanied by the usual medical school debt or $90,000 and the average house price of $800,000.  The Clinic is attempting to alleviate the latter by raising $25 million to fund housing subsidies.  Other area institutions have also started subsidy funds.  This includes Good Samaritan Hospital and Kaiser Permanente.  Kaiser offers a forgivable over time loan of 10% of the home price up to $100,000.

In St. Louis a nine person orthopedic group has put up a 56,000 square foot building.  The edifice will house the physicians and their 70 employees as well as physical therapy, outpatient surgery center, and an imaging center for MRI and CT.  The physicians remain on the staff of their hospitals but now do 85% of their surgery as an outpatient in their own office.  This is cost effective and well as profitable.  The one drawback in some areas of the country is the patient contracts. I predict these will proliferate as Medicare and managed care ratchet care and payments.    

Tennessee is paying physicians $25 million for past care in treating the troubled TennCare patients.  This was a good faith effort by the government to keep physicians in the program.  The physicians are still owed another $50 million for past care.  The state is also scheduled to make payments of $40 million to teaching hospitals that treat a disproportionate number of TennCare patients.

Last issue I wrote about two physicians in Boston who are going the route of charging patients $4000 per year for extra care.  The People's Republic of Massachusetts is now asking whether this is allowable.  Tufts Medical Plan that contracts with the doctors have asked the state to investigate.  They are afraid that more patients may jump ship in the affluent Boston area.  There has never been and I hope never will be equal access to any product or service.  This is pure socialism and should be condemned.  If people have discretionary income and wish to pay for a higher quality of medical or legal or accounting care, they should be allowed to do so.   In the same edition of the Boston Globe Online there was a story about The People's Republic having a state budget cut that will toss 300 pregnant women out of the state's Medicaid Healthy Start program.  The state increased the amount one needs to qualify for the program. Maybe the state should look at its fiscal responsibility to provide for those they have the legal responsibility to care for than those who wish to use their own personal income to avoid the Tufts patient a minute program.        

Charleston West Virginia Medical Center has given a bonus to their anesthesiologists of $350,000.  The group lost six anesthesiologists the past year.  The money will hopefully be used to add more anesthesiologists to their ranks.  However, there has been a problem between the hospital and the group.  The hospital requires more malpractice insurance coverage limits than the new State policy recently approved by the legislature.  It seems almost fitting if the group used the money to purchase the extra insurance required by the hospital. 

Stanford has finally taken some action against the Nezhat brothers that were accused of falsification or misrepresentation of medical research.  They have been relieved of their position as directors and teachers of the Stanford Endoscopy Center. The brothers state they will appeal the decision to remove them from their teaching positions.  The University said there is no appeal since the volunteer clinical faculty is a privilege and not a right.            Top

Hospitals

The worst performing hospital in Pennsylvania is the Hospital of the University of Pennsylvania.  A study looked at 22 different common procedures and the U. of Penn had higher than expected death rates in 5 of the 22. The five categories were vascular surgery, urinary tract infections, septicemia, hip surgery (not including replacements) and kidney failure.  The hospital response was that are patients are sicker.  The other academic centers did not have the same problem.  U. of Penn went through three administrators in one year and went from a money losing to a making money institution.  In the process it cut staff 20%.  Was there a cause and effect?               

Catholic Healthcare West is almost ready to sell the seven hospitals back to the Daughters of Charity from whence they came. The hospitals are in California Seton in Daly City, O'Conner in San Jose, St. Louise in San Francisco, Seton Coastside in Moss Beach, Robt. Kennedy in Hawthorne, St. Francis in Lynwood and St. Vincent in Los Angeles.

Would you go to your hospital's emergency room?  In a survey of 600 hospital administrators, 15% (11% last year) said they would not.  The reason was lack of specialists covering the EDs. The other main reason was overcrowding.  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.