County Medical Center Granted HMO License

Despite attempts by a rival hospital to block its application, Ventura County Medical Center has been granted a state license allowing it to establish its own managed-care program and to offer health insurance to the general public.

Although this dramatically changes the county’s standing as a health care provider, officials have long maintained that they have no intention of using the Knox-Keene license to compete for private-pay patients.

But representatives of Community Memorial Hospital, which lobbied aggressively against the county license, said the mere fact that the county sought the license is proof that it wants to expand its health care operations.

“For those who suspected all along that the county would go after private pay patients--well, they don’t need to get hit over the head with a hammer--here it is now,” said Doug Dowie, a spokesman for Community Memorial.

Pierre Durand, director of the county’s Health Care Agency, said the county hospital’s objective is not to attract private patients but to rein in health care costs and to prepare for managed Medi-Cal, a fast-growing state and national trend.

Still, Durand said the new state license, which was issued Friday, does allow the county to offer health insurance to anyone it chooses. Whether it decides to take advantage of this, he said, is a policy decision left up to the Board of Supervisors.

“There are no plans to do that at this time,” he said. “At least the board has not directed me to explore that possibility.”

Board Chairman Frank Schillo said Tuesday that he did not want to rule out any options available to the county.

“I can’t predict all the potential ways that we can use the license at this point in time,” Schillo said, “but I think we should explore all the possibilities. I’d like to know what the possibilities are without restricting ourselves.”

With the state license in hand, one physician said Tuesday, it is only a matter of time before the county expands its health care operations. But he said that for a taxpayer-supported hospital to compete with the private sector is grossly unfair.

“They’ve been promising and reassuring the private sector that they’re not going to compete with us,” said Dr. Gosta Iwasiuk, a general surgeon who practices at Santa Paula and Community Memorial hospitals. “But by all appearances it seems that this is what they are planning to do. Only time will tell.”

Monty Clark, regional vice president of the Health Care Assn. of Southern California, said about a dozen other counties across the state have Knox-Keene licenses, including Los Angeles and Orange counties.

Clark said the primary reason counties obtain licenses is to participate in Medi-Cal managed care programs. He noted that federal and state officials are pushing hard to administer Medi-Cal in an HMO-type system to reduce the cost of government-subsidized health insurance for the poor.

Clark said he believes that Ventura County was simply responding to this trend when it applied for its HMO license, rather than gearing up to compete with the private sector.

“All we’ve heard from the county hospital for the past several years is that they’re not going after private business,” he said. “We’re going to have to play a wait-and-see game here for a while. People are going to be watching the county real carefully on this.”

Durand said the immediate advantage of the managed-care license is that it will help the county keep a lid on health-care costs for the 2,700 employees now enrolled in its health plan.

He said the license means the county can place a cap on the money paid to contract physicians by establishing a reimbursement plan based on the number of patients seen. Under the current setup, the county pays doctors a fee for every service provided to a patient.

“This is going to save taxpayer money,” Durand said.

He said the county plans to offer insurance coverage to physicians and their employees working on contract at seven satellite clinics.

But Durand said he does not consider the move as competition with the private sector because the workers to be covered are “part of the county family.” Since they work within the county health care system, he said, it makes sense for them to be able to use it.

Meanwhile, Dowie, of Community Memorial Hospital, declined to say if the hospital will attempt any legal action to challenge the county’s HMO license.

The hospital already has a lawsuit against the county for offering insurance coverage to county employees, a move that Community Memorial says has cut into its business.

Although county and Community Memorial officials have been meeting in private recently to try to iron out their differences, Dowie said the license only makes those negotiations more difficult.

“This doesn’t do anything to resolve the issue,” he said.