Hospital Shuts Out Ailing HMO

Paradise Valley Hospital in Chula Vista on Tuesday became the first hospital in the county to respond to Greater San Diego Health Plan’s growing financial problems by refusing admission to the health plan’s members.

Beginning this morning, the hospital will admit health-plan members solely for obstetrics and emergency care, according to Paradise Valley Vice President Mickie Beyer. Members facing elective procedures will be referred or admitted to other hospitals, Beyer said.

GSDHP, a subsidiary of San Diego-based Western Health Plans, is past due on $100,000 in payments to Paradise Valley, according to Beyer. Paradise Valley’s total accounts receivable from the health plan are now more than $350,000, Beyer said.

‘Protect the Hospital’

Although the health plan’s patients accounted for only 300, or 3% of Paradise’s 1988 admissions, “it is necessary to take steps to protect the hospital against future loss,” Beyer said. The hospital “cannot continue to treat GSDHP patients without reimbursement. . . . The hospital simply cannot absorb additional financial loss at this time.”

Western, which has 130,000 members in San Diego County, has lost $20.2 million over a three-year period that ended March 31 and has closed operations in Riverside County and Nevada. State regulators have ordered Western to bolster its supply of capital.

Western Chief Operating Officer Sam Westover on Tuesday said that Paradise Valley’s decision would not have a dramatic effect on its members. “The hospital is not a critical component in our program,” Westover said. “They provided less than 2% of the hospital services” contracted by GSDHP, Westover said.

However, Paradise Valley’s decision to admit only emergency and obstetrics patients created yet another hurdle for the financially struggling health maintenance organization.

Late in June, Western asked more than 300 creditors--including doctors, specialists and hospitals--to agree to a 30-day moratorium on paying bills. However, a 13-member committee representing those creditors has not reached an agreement on a moratorium, committee Chairman Richard Butcher said Tuesday.

“The committee never really was functional,” said Butcher, a San Diego physician who is also a Western shareholder. “There were concerns about liabilities that committee members felt were possible.”

Will Damage Reputation

Butcher acknowledged that Paradise Hills’ decision to direct most of the health plan’s patients to other hospitals would damage GSDHP’s reputation because other hospitals and doctors might follow suit rather than risk not being paid, Butcher said.

Another health-care professional who is familiar with Western’s financial problems observed that companies whose employees are covered by GSDHP “have heard more complaints about doctors withholding elective medical procedures.” Those doctors fear that Western will not be able to pay its bills for services rendered. However, “the complaints are not wide-ranging,” the source added.

Last month, GSDHP and Alvarado Hospital severed their ties following unsuccessful negotiations on a new contract. “We mutually decided not to continue our relationship,” Westover said.

Western is preparing “an internal restructuring” of its debt that soon will be forwarded to the state Department of Corporations, Westover said. The debt-restructuring plan would “solve our problems,” he said.

However, the plan will not succeed unless it is approved by a majority of Western’s health-care providers, many of whom are owed money by Western, Westover said.

Discussions With PacifiCare

Western has continued discussions with Cypress-based PacifiCare Health Systems, a financially strong HMO that wants to acquire certain Western assets. Those discussions are “really moving on a parallel track with our internal plan,” Westover said.

“Our offer is on the table at Western,” PacifiCare Chief Executive Officer Terry Hartshorn said Tuesday.