Film Charity Joins Insurance Fray : Health: Entertainment fund could be an unusual model, providing care tailored to one industry.

The Motion Picture and Television Fund, the entertainment industry’s best known charity group, is trying to establish itself as the health insurer of choice for Southern California entertainment workers.

If it succeeds, the Fund could become an unusual model for reform: a regional network of doctors, clinics and hospitals offering managed care tailored to one industry.

Although some large employers, such as Xerox Corp. and Southern California Edison Co., have developed doctor-and-clinic networks for their employees, industry-specific systems like the Fund’s are rare.

“This is an unusual route--for a charity to go into the health insurance market,” said Bill Custer, a health-care economist at the Washington-based Employee Benefits Research Institute. He added: “The type of network they’ve formed is where the market is going.”

The Fund’s Industry Health Network could pose a threat to other health insurers by siphoning off customers in an industry that employs roughly 300,000 people in the area.

“If I was a health insurer with a large client base in the entertainment industry, I’d be concerned,” Custer said. “It’s another competitor. These people have ties to the industry, and it’s easier for them to market their services because of their name.”

Southern California is home to some of the nation’s largest and most experienced managed-care companies, however, and the market can treat newcomers badly.

The Fund, though, is counting on its reputation for good deeds in the industry to give it a leg up on the competition.

“We believe we have a special relationship with our industry, which allows us access that other health plans just don’t have,” said William F. Haug, the Fund’s president and chief executive. “There’s an affinity to the Fund that’s unusual. People . . . want to be cared for by an organization that is part of an industry that has been part of their lives.”

Another edge for the Fund: its close relationship with many Hollywood movers and shakers, such as Walt Disney Studios Chairman Jeffrey Katzenberg, who chairs the Fund’s separate fund-raising arm.

Since it unveiled its network last year, the Fund has signed up the Screen Actors Guild, the Directors Guild of America and the Motion Picture Industry Health Plan, all of which offer the Fund’s plan to their members as one of several health insurance choices.

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“What attracted us was this was not the typical health plan, but one that would focus on the entertainment industry,” said Bruce Dow, administrative director for the SAG-Producers Pension and Health Plan. “Their facilities only service members in the entertainment industry, so there is an exclusivity to it.”

That exclusivity could pose a problem for the Fund’s network under President Clinton’s proposed legislation. Clinton’s plan would establish regional alliances that would purchase insurance for employers or individuals. The President’s proposal would not allow plans limited to specific groups or industries, said Custer, the health economist. Haug said he is aware of that, but he believes Congress could change many aspects of the Clinton package before it is passed.

The Screen Actors Guild’s roughly 20,000 members in Southern California now can choose the Industry Health Network, along with Blue Cross’ Prudent Buyer plan and conventional indemnity insurance. But SAG gives members incentives to choose the Industry Health Network: higher reimbursement rates and no co-payments.

Generally, union health funds have been slower to push members into managed care than private employers, according to health benefits consultants. But now the unions “to a certain degree, are getting forced into managed care,” Dow said. “If you don’t participate, you get cost-shifted tremendously.”

With the rapid growth in health maintenance organizations--a move expected to accelerate under national health reform--employers and other groups face a phenomenon known as cost-shifting. This occurs when hospitals and other providers that are inadequately reimbursed for services--for example, by government programs like Medicare--hike the rates they charge private insurers to make up the difference.

The Fund, founded in 1921 by Mary Pickford, Charlie Chaplin and D. W. Griffith, among others, is a nonprofit organization that provides medical, retirement and child care; preschool programs and social services for the entertainment industry.

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Currently, the Fund offers a so-called preferred-provider organization, a health care payment system that requires members to use doctors in the network or pay more out of their own pockets.

By mid-1994, the Fund hopes to begin marketing an HMO plan, which would require members to receive all their care within the network. Operating an HMO involves a higher level of financial risk and requires significant capital, so the Fund plans to team up with another HMO. Haug said the Fund is talking to some managed-care companies, but he would not name them.

The Fund will initially target its PPO at the guilds and large studios, but believes that the HMO will be especially popular with the hundreds of small entertainment companies that make up a big chunk of the industry’s work force.

Frank Guarrera, the Fund’s chief financial officer, said the network plans to price its HMO membership in the “mid-range.” The Fund will stress quality care, its status as a nonprofit organization and its unique position in serving only an entertainment clientele. Unlike publicly held insurance firms, he said, the Fund’s “focus is not bottom-line profits and the payment of dividends to shareholders.”

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The Fund’s medical facilities include the 256-bed Motion Picture and Television Hospital in Woodland Hills and primary-care clinics in Burbank, Hollywood, West Los Angeles and Woodland Hills. It is building a $7.5-million medical center in Toluca Lake that is scheduled to open in mid-1994.

To flesh out its hospital and primary-care clinic network, the Fund has contracted with physician specialists affiliated with three hospitals: Cedars-Sinai Medical Center in Los Angeles, St. John’s Hospital and Health Center in Santa Monica and St. Joseph Medical Center in Burbank. The hospitals were chosen for their locations and because a survey of entertainment industry workers found that many believed they provided the best care, and many said their doctors were affiliated with one of them.

In selecting specialists at the three hospitals, one criterion was that the doctors should have had experience with patients in the entertainment field. The Fund also looked at the doctors’ experience with managed care, their clinical outcomes, and sent representatives to visit doctors’ offices.

“They went around to the offices looking at the waiting rooms and seeing if the magazines were a year old and if the furniture was rotten or nice,” said Dr. Thomas M. Heric, senior vice president of professional business affairs at St. John’s. “A waiting room is part of the doctor’s marketing, and it conveys a first impression.”

William A. Frumovitz, an obstetrician-gynecologist who was one of 35 specialists chosen from several hundred St. John’s doctors who sought to join the Fund’s network, said the screening process “far exceeded any other I’ve seen.”