There is still hope left folks just as long as we 1.) stay away from Ca as a physician or 2.) start unionizing who knows? or 3.) practice in rurals get pay more or 4.) stay away from private practices 5.) perhaps kill the HMOs!! Read on this new article I found in a medical magazine this month.
The long-term outlook is not good news for any physician, or for those considering medicine as a career. In 1999, medical school applications fell for the third straight year - the result, some say, of flat incomes. "Physicians will always be paid good salary," says one expert. "But if you want a high salary, be a stockbroker or computer scientist. People will have to go into medicine for other reasons."
The California nightmare: Is this where managed care is taking us?
If we all had been seers-or perhaps if we'd simply given more thought to the situation-we might have seen this scenario unfolding: Health plans, vying for market share in a state overwhelmed by managed care, squeeze doctors dry so they can charge employers less. Eventually, there's too little money in the system to adequately support the delivery of care.
So it goes in California, where thousands of doctors are facing personal financial crises as IPAs and PPMs teeters, or collapse, around them. More than 130 of the state's approximately 350 independent practice associations and physician practice management groups have declared bankruptcy or gone out of business in the past three years, according to the California Medical Association. CMA estimates that California doctors are currently owed more than $150 million from these failed groups-including $60 million from FPA medical Management, which went belly-up in mid-1998.
The personal fallout is dramatic. Some California primary care physicians now make as little as $60,000 a year, 55 percent less than the national average of $134,000 for their peers, according to a PricewaterhouseCoopers report. Some now hold two full-time jobs. One-fifth of those over age 65 have delayed their retirement. Others are retiring early, cutting back on staff, or moving into medical administration, consulting, or other professions entirely. More than 2,000 doctors, the CMA estimates, have simply packed up and left the state. "I can't count the physicians I know personally who have made significant changes over the last year or so," says internist Cynthia A Point, who practices at Pacific Coast Internal Medicine, a group of five internists in San Francisco. Point is also on the board of directors of Brown & Toland Medical Group, a prominent Northern California IPA. "These colleagues have either left the area altogether, retied, or taken a job in which they're not involved in direct patient care. At the least, they've opted to cut all ties to managed care except for the loosest PPO contracting. And we're going to see more of this." Point describes Brown Toland's condition as "sever but not terminal," with doctors' fees being cut by at least 30 percent.
Ironically, the very size and sophistication of some of California's doctor groups may be part of their problem. In most other states, few groups are big or experienced enough to take on risks formerly managed by the HMOs. "But it could happen anyplace with a high penetration of managed care and relatively sophisticated physician networks," says Kim Ross, vice president for public policy for the Texas Medical Association. Ross cites Illinois, Ohio, and Wisconsin as possible candidates.
These risks are being shifted to doctor groups through a relatively new generation of HMO contracts. They transfer administrative duties such as physician credentialing to the doctor groups. Risk management responsibilities are transferred, too, including pharmacy risk, the unpredictable devil of health car costs. The plan pay these so-called delegated IPAs primarily by capitation.
Why did groups agree to these contracts? Some wanted to regain control over medical decisions. But others were drawn to the potentially high reward for accepting risk. They wanted to control a bigger piece of the premium pie, and to profit by managing their patients efficiently.
The CMA points to another powerful inducement, particularly for small plans: the HMOs' overwhelming bargaining power. The six biggest insurance plans operating in California now control 90 percent of the market. Many small IPAs viewed the plans' contracts as take-it-or leave it propositions, and with good reason.
Now however, the CMA and the doctors argue that the HMOs' capitation rates become manifestly inadequate. One example CMA cites is the $10 per child per month that some California pediatricians report receiving from their plans-inadequate even to pay for the state mandated vaccines they must provide their small patients, let alone the costs of administering the shots.
Meanwhile, charges FP Jack C. Lewin, chief executive officer of CMA, the HMOs' remain too high. "When they transfer all that risk to doctors, they should be reducing their administration and profit-taking to give physicians enough money to manage patient care," says Lewin. "But their whole scheme was to delegate the risk and increase their profit with the savings." Many angry physicians also portray the IPAs as too organizationally weak, politically inept, and inexperienced in business to negotiate effectively with the big HMOs.
Not surprisingly, the HMOs see things differently, "That's not an accurate reflection of reality," says Walter A. Zelman, president and chief executive officer of the California Association of Health Plans. "Plenty of medical groups are very savvy, very experienced, and they bargain very hard with HMOs."
But some medical groups undoubtedly don't have enough experience to handle this new generation of risk, Zelman agrees. And some got into trouble by underestimating how much it would cost them to deliver medical services. "That doesn't help anybody," says "Zelman, "and I think health plans have to be wary of it. What we're really talking about is bargaining relationships. In some negotiations, the health plan may have a big more leverage; in others, the medical group has the upper hand." "We don't want medical groups to fail," say Jim Harris, spokesman for Cigna Healthcare of California, which contracts with 220 IPAs and has 750,000 members statewide. "It's our interest to have them succeed." Harris doesn't deny that many physician groups are in trouble, but notes that public-sector financing-Medicare and Medi-Cal also pays power rates in California than elsewhere in the United States. "We don't think it's fair to put all the blame on the HMOs" he says.
Indeed, the PricewaterhouseCoopers study, commissioned by CMA, details a string of events since the mid-1990s that have led inexorably to the current predicament. "The financial crisis for California physicians didn't happen overnight," says Cherise Skeba, a PricewaterhouseCoopers senior manager and actuary.
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M.D.'02
