Low-Cost Health Groups Distress Physician Critics

Punctuated by the dramatic sound of a heart beating, the radio commercial sounds ominous: “Imagine a place where health care is controlled by a handful of billion-dollar corporations, and patients are refused available treatment because it isn’t good for business.

“Well that place could be Los Angeles someday soon if big business has its way. Would you trade your personal physician for a doctor chosen at random by a corporation? We believe your health should be your business, not big business.”

The warning comes not from some disgruntled consumer organization but from a group of doctors called Physicians Who Care of Los Angeles. And their target is not big business but health maintenance organizations--groups that provide nearly all medical care for one fixed prepaid fee and little insurance paper work.

Alarmed at changes that HMOs are bringing to medicine, grass-roots doctors’ groups are fighting back, using everything from radio ads to bumper stickers in states from Hawaii to Florida.

“We are at war with HMOs,” said Robert Rubin, an internist who heads an anti-HMO group in Missouri called the St. Louis Medical Practice Committee. “We want the public to know the truth and the truth is that there is only one way for an HMO to make money and that is by rationing health care.”

A cottage industry a decade ago, HMOs have doubled in size in the last five years and now cover about 21 million of the 188 million people with private health insurance or Medicare. HMOs have helped combat skyrocketing medical costs by closely monitoring hospital admissions and diagnostic tests. But some doctors fear that the cost-conscious HMO industry will erode the quality of health care and choke off the traditional practice of medicine. These doctors say HMOs encourage doctors to cut costs mostly by cutting corners.

Questions New Role

“We are being forced to become medical administrators, working at economic odds with each other, when we are trained as professionals to solve health problems,” said Ronald Bronow, a Los Angeles dermatologist who is president of Physicians Who Care in Los Angeles, in a speech before an audience of about 150 doctors this month at the downtown Bonaventure Hotel. “Our singular goal has always been the welfare of our patients. Now, there are impediments--if not outright obstructions--to that goal.”

The physician critics of HMOs clearly have an ax to grind. Accustomed to spending whatever they think is necessary to treat a patient and getting reimbursed for all of it, they are against the restrictions that they believe HMOs would impose on their medical practices and fear HMOs may jeopardize their incomes by siphoning away patients.

The average number of patient visits per week, for example, dropped 26% to 74.7 in 1984 from 100.8 in 1975, as more people defected to prepaid health plans, according to the American Medical Assn. in Chicago.

Savings Claims Supported

What’s more, HMOs have received almost universal praise from many employers and government officials who have been promoting them in recent years as a way of controlling skyrocketing health care costs. Indeed, their claimed savings of 20% are supported by a recent Rand Corp. study of a 325,000-member HMO in the Seattle area.

“HMOs have brought competition into a system where people haven’t had choices,” said Richard T. Burke, chairman and chief executive of United HealthCare Corp., the nation’s second largest investor-owned HMO behind Maxicare Health Plans. “Benefits have improved . . . prices have come down because there is an incentive to provide a better and cheaper product.”

Burke added that the physician critics “have no evidence” that HMOs deliver poorer quality of care. “This is simply a smoke screen issue raised by a group of people trying to capitalize on physician’s concern about the effects of (HMOs) on their practice. These doctors don’t get that much support from the medical community.”

About 80% of the nation’s 480 HMOs have been in operation less than 10 years, according to Excelsior, Minn.-based Interstudy, an HMO research group. And criticism of the industry, coming at a time when HMOs are growing rapidly, could slow expansion by sparking a reexamination of HMOs by employers and workers, some experts say.

‘Handwriting on Wall’

“I think the handwriting is on the wall,” said Jeffrey Miles, president of the California Assn. of Health Underwriters, a trade group representing health insurance agents and brokers in the state. Today, Miles said, other forms of insurance, including traditional insurance and preferred provider organizations, which allow consumers to freely choose their physician, “duplicate the benefits of HMO at equal or better quality and lower or comparable cost.”

Last month in New York, for instance, three HMOs vying for $500 million in city employee health insurance premiums fell far short of their enrollment goals for 1987--the first time the state allowed for-profit HMOs to compete for business in the state.

Each of the three--Maxicare New York Inc., a unit of Maxicare of Los Angeles; U.S. HealthCare of Blue Bell, Pa., and Healthnet, a subsidiary of Empire Blue Cross-Blue Shield--spent more than $1 million in radio, television and print advertising. Yet they succeeded in attracting only 3,000 of New York City’s 425,000 employees, according to Donna Gwynne, New York City director of employee benefits.

Of the remaining workers, 62% kept their existing indemnity coverage, and about 37% stuck with a local nonprofit HMO largely because the new HMOs cost more and had small rosters of participating doctors, Gwynne said.

Meanwhile, in Atlanta, a disenchanted Bellsouth Corp. is trying to trim its current roster of 16 HMO plans that it offers to 93,000 employees. Bellsouth is making the move, said Joe Johnson, manager of benefits planning, to improve “the quality of care” and to control health care costs. “We don’t want to subsidize HMOs by giving them all our younger people,” said Johnson, voicing a complaint made by many employers who say HMOs siphon off healthier workers, yet charge higher premiums than other plans.

Under the HMO system, insurers and employers pay a fixed amount per patient per year. Yet unlike traditional fee-for-service health insurance plans, which generally pay up to 80% of the fees charged by whatever doctor the patient chooses, HMO members can visit only those physicians under contract or employed by their HMO.

HMO doctors try to keep patient care costs low, mostly by keeping patients out of the hospital and minimizing such things as diagnostic tests and referrals to specialists.

Some doctors harshly criticize that approach.

In Honolulu, 300 physicians, nearly one-third of the city’s total, have formed a group to promote the traditional practice of medicine. They plan to strengthen their position against HMOs by referring patients to one another. In San Antonio, Tex., the Physicians Who Care group has spent about $50,000 to run radio and print ads that accuse HMOs of cutting corners in providing medical service.

And in West Palm Beach, Fla., a physicians group called the Committee to Save Private Patient Care has sponsored free health fairs, passed out bumper stickers urging “Save Private Medicine” and started a weekly radio show during which listeners have been encouraged to call their congressman to complain about a local HMO.

At the heart of the doctors’ complaints is the management system employed by many HMOs to control access to care.

The HMOs that operate through a network of independent practitioners use so-called “gatekeepers” or primary care physicians who control patient access to costlier medical specialists and the administration of expensive diagnostic tests. (Other HMOs, such as Oakland-based Kaiser Permanente Health Plan, employ doctors directly and theoretically have no incentive to restrict access to specialists because the specialists receive the same salary regardless of how many patients they see.)

Each gatekeeper is paid a preset amount for each assigned patient. He or she agrees to see the patient as often as needed and to handle tests and referrals to specialists, some of whom are under contract to the HMO. But the specialist’s fee and, sometimes, the costs of tests come out of the gatekeeper’s flat fee.

Some Split Profits

Other HMOs pay groups of doctors a gross amount for care of a pool of patients; the doctors and the HMO split up the profits left after expenses.

Under either arrangement, however, the doctors have an incentive to provide less care. Other incentives encourage them to see as many patients as possible by treating them as quickly as possible, which tends to have the same effect.

The PruCare HMO affiliate in San Antonio, for example, pays doctors a $425 bonus if they release mothers and their newborn babies from the hospital within 24 hours of birth.

At Sanus Health Plans in St. Louis, 25% of a doctor’s fee is withheld by the HMO from the insured’s annual premium and returned at the end of the year--but only if the physician hasn’t ordered too many tests, referrals and doctors visits, according to Barrett Toan, executive director.

Many health care executives, however, say the critics overstate the role of gatekeeper systems in influencing the quality of care.

90% Stay With HMO

Sanus’ Toan, for instance, says his HMO has received only 11 complaints from its 44,000 members regarding access to specialists or tests. He notes that 90% of members stayed with Sanus when given a chance to opt out, and the budgets the HMO has established for its gatekeepers have proven adequate.

“In 1985, all the (budget) pools were in surplus and (so far) in 1986, a majority are in surplus,” he said. “The incentive is to provide care. To withhold care is to encourage patients to leave or get sicker and (therefore) need more expensive care.”

Yet as the industry grows more crowded, experts fear HMOs will resort to more severe cost-cutting as they fight each other to hold onto customers and market share--despite evidence that such measures can lead to patient dissatisfaction.

In the Rand study, for example, 15% of the Seattle-area residents assigned to the HMO group were dissatisfied with their care, contrasted with 10% of members in traditional programs. The HMO users were upset by long waits for appointments and the reduced availability of hospital care and specialists, said Allyson Ross Davies, the report’s principal author.

“Those seem to be characteristics not only of the HMOs we studied but of all HMOs,” said Davies. And those factors, she said, “seem to be responsible for the lower medical costs experienced by HMOs.”

Treatment Criticized

Los Angeles physician Joshua Ritchie cites the poor treatment he said was received by an elderly patient as an example of how some HMOs try to cut costs by skimping on expensive hospital care.

Ritchie said that when Ernest A. Payne of Los Angeles began going into convulsions and complaining about severe headaches last August, his wife tried to have him admitted to California Hospital Medical Center under Payne’s health insurance plan with FHP Corp.

But according to Ritchie and Mrs. Payne and another doctor she asked to examine her husband, FHP, a Fountain Valley-based health maintenance organization, would not hospitalize Payne, 80, even though he lost consciousness and had to be sent home by ambulance.

Payne, a retired nurse, was sent to another FHP facility and lapsed into coma after being released on Aug. 29, Ritchie said. He died Oct. 11, due to “cardiopulmonary arrest,” according to his death certificate.

“It was obvious the guy was in desperate shape and needed to be hospitalized,” said Ritchie, who was hired to treat Payne and had him hospitalized in Midway Hospital after FHP refused to hospitalize him.

Confidentiality Cited

Citing patient confidentiality rules, FHP spokesman Stuart Byer said FHP doctors could not comment on why Payne was not hospitalized. However, Byer said that Payne was not simply turned away but was asked to see doctors at an FHP group facility. And, Byer said, Payne saw a doctor at the group facility later the same night he sought hospitalization.

“For urgent care, if you are just not feeling well, we want you to go to the medical group (that) you joined,” rather than go directly to a hospital, Byer said.

“We believe that medical decisions should not be debated in the media,” he added. “Those decision are best left with physicians.”

HMOs are coming under fire not only from independent doctors, such as Ritchie, but also from doctors who, often out of economic necessity, have joined HMOs--and who don’t like what they are finding inside.

“The system puts a lot of walls between me and doing the job I want,” said Robert Leibowitz, a Los Angeles dermatologist who sees patients enrolled in Maxicare Health Plans Inc.

‘Conflict of Interest’

“It’s a system that rations care in a way that’s time-consuming and creates a built-in conflict of interest” for doctors, Leibowitz said. “The less you do, the more money you make. I wouldn’t want to be a patient under an HMO.”

Even so, some consumers who have seen medical deductibles climb on their traditional fee-for-service insurance policies are unable to work up much sympathy for the plight of independent physicians.

Lois E. Chaney, a public school teacher in Bakersfield who is insured by Blue Cross of California, said her husband, a professor at Cal State Bakersfield and an HMO member, had no trouble seeing a specialist when he sought treatment last summer for an infection in his lungs.

Compares Plans

“As far as I’m concerned, the (independent) doctors have been asking for it,” she said. “They have made it possible for these HMOs to succeed. The prices that doctors charge are just incredible. And I don’t think there is any appreciable difference in the quality of care between my plan and my husband’s HMO.”

Many more consumers may begin to make such comparisons as they encounter the physicians’ ads challenging HMOs. Though the crusading doctors concede they have an uphill battle against HMOs, which spend considerable amounts of money annually on marketing, they say they will continue to press their case.

HMOs “spend millions of dollars a year on advertising, while we can only afford to distribute pamphlets,” said Ira S. Jaffrey, an oncologist in Pomona, N.Y., who heads an anti-HMO group of physicians. “But the average American should be concerned about his access to the medical care system. We have a responsibility to try to educate” health care consumers about that, he said.