October 15, 2001 

Managed Care Death
Kaiser Rationed Care
People's Republic of Massachusetts
Free Speech
Bad Publicity

Managed Care Death

In Silicon Valley, employers were told at a recent conference that the cost of health care will continue to climb.  The employers should expect double digit inflation for at least several years.  This is due to rising provider costs.  in Silicon Valley the overhead is about 70% compared to about 50% nationwide.  This is forcing providers to either get more money or drop plans, both of which will raise costs.  The event foretold how employees will have more control of their heath expenditures by raising the deductibles or by a defined contribution plan.  

Atlanta health care costs will go up 12-16% in 2002.  This will hurt the small employers who will need to pass the costs on to their employees.  There is nothing left in  managed care to reduce.  The originally reduced premiums by rationing care.  This is no longer acceptable.  The provider networks became unprofitable and are being abandoned.   

Corona Medical group in Southern California is closing.  This is another victim of managed health care gone bad.  The patients will be moved to different medical groups with different physicians.  Corona is owned by the same person who owned the large and now defunct KPC Medical Group.  The clinic is out of stamps and can not send letters.  Their telephone has been disconnected for lack of payment and the employees have not been paid in a month.

Fort Worth, Texas Medical Select has officially gone bankrupt and the judge has allowed the termination to cancel contracts with its insurers, management company and physicians.  This allows the physicians to negotiate new individual contracts with the insurers.  Many physicians are getting the idea and are not resigning with the insurers.  The patients will then either change physicians or pay out of pocket.  The cheapest part of medical care is the physician with only 12 cents of every dollar going there.  

In South Carolina only 10% of the population belongs to a HMO.  Blue Cross/Shield is eliminating its HMO Blue but keeping its Companion Healthcare HMO.  The two HMOs have different benefits and a different panel of providers. More changes of providers or insurance companies.

United is dropping all its individual plans in Arizona.  This means 7500 more will be looking for insurance.

Blue Cross of Wisconsin will drop its M+C in the Milwaukee area but retain its secondary insurance.

In Sonoma County, California there are two M+C plans remaining.  These will both about double the monthly premiums for next year.

MCOs had to September 15 to make a choice regarding their M+C programs.  58 have decided to opt out dropping 536,000 people from the roles.  That is about half the amount dropped last year.  CMS is attempting to draft some type legislation that will lure the insurers back.  That will require more money for the provider networks and for the HMO bottom line.

In the home of managed care, Minnesota, the price of health insurance is rising at 16%.  Health officials state that some of the price increase was due to artificially low prices earlier that need to be made up now.  This state also has to take some of the heat since it taxes all providers 2% on services and goods.

In California CalPERS, the largest purchaser of health care outside the federal government, has dropped four plans.  This will result in 150,000 or its 1.2 million enrollees to find a new plan for 2002.  The head of CalPERS stated it will reevaluate its dependence on HMOs.  He says "They need me a hell of a lot more than I need them."  I view of the physicians belonging to multiple HMOs, the patient will in most cases keep their regular physician.

The Miami Herald reports that the healthcare rate boost will be a "jaw dropper."  South Florida expects, along with the rest of the managed care markets a double digit jump of about 15%.  The are also looking at the same trend for the next two years.  Florida's HMOs have been among the worse in the country from a financial standpoint.  In order to stay in business they need the higher premiums.  These premiums will be passed on to the employee.  

The people of southwest Florida will not have worry about the increased cost of M+C HMOs.  They have only one.  They all went away but kept the non-medicare business.

In Cleveland Kaiser is doubling its rates, placing a premium on brand name drugs and cutting the drug benefit by half.  United is dropping all drug benefits.  

Oklahoma's third largest HMO, WellCore America HMO Perfect Harmony is dropping all M+C & commercial HMOs and shutting its doors.

The Managed Care Magazine admits that managed care will falter in the near term due to high hospital and physician costs for employees.  The health care shortage is a direct relationship with the managed care movement.  As managed care moved in there were fewer nurses, pharmacists and ancillary professionals needed.  Now the hospitals are hurting and need to pay premiums to get these people to return.  The premium salaries and bonuses lead to more money needed to pay them.  This leads to higher premiums to employers and employees.  The futurists have now admitted they got it all wrong.  They are not doing the same predictions as before.  Another consequence of managed care is a physician shortage.  it was predicted that less physicians would be needed due to managed care and some schools scaled back their classes.  When they did keep the numbers they reduced the specialty slots and now there is not enough specialists to care for the patients.  The super specialists that are left are leaving the highly saturated HMO states for greener pastures.  An example is that Children's Hospital of Los Angeles has been looking for several years for a chief of neonatology.  This shortage is not supposed to be corrected for about 10 years.  The AMA has released a report that for the fourth straight year applications to medical schools have decreased.  In 2000 the decrease was 3.7%.  The lines will get longer and without help many will not receive care.  In Redding California, a rural community, there is a several year wait for routine ENT procedures.  This has caused physicians from southern California to fly to Redding twice in the past six months to help clear the backlog.  The nursing situation is horrendous.  As managed care decreased the ability to be hospitalized it raised the acuity for those that did make it in.  There were fewer nurses to take care of these sicker patients and burnout became a quick reality.  Legislative action to correct these shortfalls are 5-8 years away.  The future is not bright.  Thank you futurists and those managed care companies that employed them for their forecasting.

All is not bad news in this dying industry.  The NCQA has stated that as time has progressed the gap between the best and worst health plans in quality has narrowed.  The lower quality plans have begun the climb into better quality.  The report did not state the growth of quality of the previously better rated plans.  There are no measurements for those outside of health plans. 

For the majority of you that do not belong to the AMA, they report about physicians dropping HMOs.  Many physicians are doing this by starting to drop the worse paying ones and then progressing.  Those that have cut the cord have found that over a year most patients have returned.  Much of the financial loss may be overcome by paying strict attention to your billing codes by charging and documenting what you are doing.  It also helps if you practice in a more affluent area without one dominant employer and push plans on patients that you accept and tell them why they should do this. 

California has rated the state's HMOs.  They used five categories.  These are wellness care, treating acute illness, treating chronic illness, doctor communication and service and service from the HMO itself.  Only Kaiser of Southern California in the state received good marks in all categories. 

Physicians in California are continuing to leave the profession or change the way they see patients.  This includes going back to school for an MBA or as in the case of this writer a JD.  Others have continue to drop HMO patients as they make up a larger percentage of their practices than the money received.  One internist states that HMO patients make up 30% of his practice but only 10% of his income.  He dropped the HMOs.  A study by MGMA showed that California physicians make 14% less than their national peers.  

In Pennsylvania  a study by the state CAT fund states there is no exodus from the state by physicians.  They state there are more physicians in the state than 5 or 10 years ago. What they don't state is how the other population has grown and what is the percentage of physicians per 100,000 population.  They also state that there is a loss in some specialties and in some parts of the state.  In the past 4 years there has been a decrease of 20% of orthopedic surgeons in eastern part of the state.  

The problem between Intermountain (IHC) and its physicians in the Ogden area may be coming to a close.  The physician group that bolted several months ago now wants to re-join.  That defection left IHC with no significant presence in the community.  IHC has stated there will be no separate negotiations with the physicians in the matter that drove them apart in the first place, fees.  IHC had set a 4% increase and the physicians want 38% more.  Stay tuned.  

In Florida a rift between Aetna and Florida Hospital Organization has created problems for the 300,000 insured for the past 6 months.  Now the feud is ended with payment of higher rates to the hospitals.

Denver has started a group that will directly contract with physicians and hospitals.  There will be no middle man, HMO. Thee will be three cost centers; high, medium and low.  The employer decides which one they want by being given the particulars of each. Insurance companies will only provide financing, not management. 

The LA Times said it the best.  Those that lose their HMO coverage are still covered by traditional Medicare.  When Medicare was passed in the Johnson era it only promised coverage for hospitals under part A for a deductible and a 80% payment of physician bills under part B.  This would cost a per month premium.  One could then purchase if wished a secondary insurance to cover the 20% that Medicare did not pay.  That was fine then since Medicare paid usual & customary charges.  Now there is a cap on Medicare charges and maybe it will cost more for the secondary insurance than the additional 20%. By going to standard Medicare the patient gets complete freedom of choice of any physician unless they have dropped out of the program. Top

Kaiser Rationed Care

Kaiser has been caught.  A law suit filed against them has led to discovery of many documents proving what we who practiced in the private sector already knew,  Kaiser stated in ads that the care was in the hands of doctors but in reality they were there to ration care and make sure patients did not get to see specialists or in some cases even physicians.  The best way to manage care was to make sure it was inconvenient to obtain.  Roadblocks went up for primary care appointments, referrals and lab tests.  In one area the ratio of  primary care physicians to patients was 1 per 3,333.  The private practice physicians all knew this and competed against Kaiser with glee.  Top

People's Republic of Massachusetts

You got to love them.  The Massachusetts southpaws are at it again.  Last year they put up a ballot measure to foist universal health care on all subjects.  It rightfully went down in defeat, the cost being extremely high.  This time they are asking that the voters take away all taxpayer funded health insurance from all representatives including the governor unless they enact a health care program that covers everyone and bankrupts the State.  The Attorney General needs to rule whether or not the question is a legal one for the voters to decide.  There is a law that prohibits a defeated ballot measure from reappearing for six years.  The people behind the ballot want the same taxpayer health coverage as the lawmakers.   

The Attorney General has decided the law can not be placed on the ballot for another five years.        Top

Free Speech

Due to vacation and computer problems this is my first musing since the attack on September 11.  As awful as that attack was, some of the aftermath is possibly worse.  True, no additional lives were lost but freedoms were buried.  A medical case in point is the release of physicians from medical staffs because of their ethnicity and how others perceived these physician's actions.  In Florida a foreign born Indian physician stated "Americans got what they deserved".  While this statement is certainly loathsome it does not deserve the removal from the medical staff as a summary suspension.  This is only to be used in egregious medical quality cases, not for personal beliefs.  This physician was not even given a peer review hearing and should sue the hospital for due process concerns.  
A middle eastern physician resident at the Cleveland Clinic was removed for allegedly celebrating the attack.  He was given a kangaroo court peer review and is now appealing the decision. Some middle eastern or others have been targeted by red necks but those in medicine should be above this hypocrisy.  These two physicians are owed an apology by their hospitals and the medical staffs. 

In another forum a left wing woman spoke at a Amherst, Massachusetts town meeting against the town hanging 29 American flags along its streets.  This woman has been threatened for espousing her American liberty of free speech. This talk at the town meeting happened on September 10, 2000 and had the misfortune or misguided belief to state that "the flag was a symbol of of terrorism and death and fear and destruction and oppression". She has been threatened ever since.  We may not believe her statements but in our country we need to be tolerant in allowing her to have her own beliefs and to be able to express those beliefs.                Top

Bad Publicity

A person who's wife died in Newton Wellesley Hospital in Massachusetts heard rumors that he had murdered her.  He went to the hospital for help but the hospital put a restraining order on him to keep him away from the hospital.  In a discovery motion a nurse stated that it was a widespread rumor that the person, a respiratory therapist killed his wife post partum by injecting her with a nerve paralyzing drug.  Since the hospital wouldn't help and he was frustrated he spent $4000 of his money to print the Massachusetts Dept. of Public Health's entire report in the local weekly newspaper.  The report was not nice to the hospital stating they were tardy in response to start CPR, and even more tardy in their actions during a Code Blue.  The report also criticized the hospital for not following their own procedure for monitoring the level of a given narcotic.  The hospital went to court to stop the publication and of course lost since it is freedom of speech and public documents.  The following week a representative of the hospital admitted that in 1997, when the death occurred, the hospital had significant problems with certain procedures and policies.  Don't think people who are upset are just going to go away and curl up.                            Top

Malpractice Insurance

The West Virginia malpractice crisis is lessened.  The state and Medical Insurance of West Virginia negotiated a deal the the insurer would continue to cover 90% of its insured plus 90% of those that had been dropped by PHICO, the bankrupt Pennsylvania company.  The insurance will last for a whole six months and the decision of who to insure would be up to the insurer.  In return the insurer got a lower fine for not following regulations than it normally would.  The insurance company is asking for a 30% raise in its premiums.  Some of the states physicians may become university professors to obtain malpractice insurance.  This of course, will not help these physicians in their private practice.    At least some are beginning to fight in the legislature.  That is a good step but I hope they don't truly believe the legislators will listen to them without a stick.  The carrot approach will not work.  Governor Wise believes it's all right to lobby but not scare. He's wrong! These physicians need to do whatever they need to do.  Some are having patients write letters and postcards.  Others are speaking about the problem at public meetings and saying the truth-the physicians will leave if relief is not coming. This state's physicians still don't get it. They need to control their own destiny with their own insurance companies and push for tort reform.  Until this happens they will always be unsettled.   

The New York Times has published an article on the nationwide malpractice premium crisis.  They show how the awards have escalated and now account for one-tenth of the rise in healthcare costs.  This is due to the defensive medicine again being a major contributor to the costs.  Several reasons for the premium increase are the lack of the rate of return on investments by the insurance companies and the more unfavorable outlook of the community toward managed care rationing.     Top 

CHW Loses Local Boards

CHW is going to a regional system for its 48 hospitals.  This means the dissolution of each hospital Board and the transfer of power to the four regional offices.  CHW is bleeding big time, having lost mucho dinero ($317 million) in the healthcare arena.  Some of the hospitals are resisting the transfer of power.  An example is the dissolving of the Boards of the four Mercy Sacramento hospitals into one Sacramento area Board.  This Board would have no fiduciary or planning authority.  Why they exist, I do not know. 

Service Consolidation

Alta Bates Hospital of Berkeley and Summit Hospital of Oakland joined several years ago.  They are now, under the tutelage of the Hunter Group considering the consolidation of services.  This means moving the OB and Oncology to Alta Bates and the Cardiac Surgery to Summit.  The community reaction will be interesting. These hospitals are four miles apart.

Up the road the five mile apart John Muir/Mt. Diablo System is being sued again by Mt. Diablo, they lost the first time, to stall the inevitable consolidation of OB out of Mt. Diablo and into John Muir.  This time the suit is for not having an open meeting.  Mt. Diablo is a District Hospital and must have its meetings open under law.  John Muir is a private hospital and is not under the same constraints.  The Systems is also not under the legal requirement since there are only two of the five Mt. Diablo Board on the System Board.  What a waste of money.  Top

Bogus Phone Calls

Several hospitals have reported people posing as physicians asking for outside lines and then calling multiple international locations.  You should be on the lookout for this.  It is recommended that if calls go to suspect terrorist nations the FBI should be notified.            Top

JCAHO Sentinel Event Alert

The JCAHO has decided to list monthly sentinel event alerts.  This wonderful decision puts the burden on all hospitals to consider or incorporate these into their policies.  This will continue to drive up the cost of hospital care.  Some of the alerts are only for one instance and have no relevance to most hospitals.  Others like the most recent regarding medication errors and abbreviations are relevant to all. 

In another case which may soon be a JCAHO warning North Collier Hospital in Florida has revised its discharge policy by giving specific care instructions to parents taking home high risk delivery infants after a newborn addicted to OxyContin died following a premature hospital discharge.  Please see upcoming newsletter on alternatives to JCAHO Accreditation.            Top


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.



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.