Income Declines as Physician Turns Away HMO Patients

By DARYL KELLEY

July 26, 1998 12 AM PT

TIMES STAFF WRITER

SANTA PAULA —

Physician Gus Iwasiuk used to work 75 hours a week. Three hundred times a year he would scrub down, pull on his surgical mask and do the job he was trained to do.

Then HMO medicine caught up with him.

“It’s a different world now,” said the 55-year-old general surgeon. “In the last couple of years, I’ve seen a dramatic change.”

He does one-third fewer operations than two years ago, and his income falls each year. He earned about $150,000 in 1996; this year he says he might net $100,000. And the pendulum continues to swing against him.

It’s not as if Iwasiuk chose to ease into retirement. “I would work harder if I could.” And it’s not as if he still doesn’t make a good living. “Nobody is going to cry for me.”

But the surgeries--to repair hernias, to remove cancers and gall bladders, to mend ruptured livers and spleens--now often go to other doctors.

Iwasiuk hasn’t lost his skill or his reputation; he is reputed to be a talented surgeon and was president of the Ventura County Medical Society in 1994.

But he has refused to align with HMOs or to join a surgical group to seek out managed care contracts at ever-lower rates.

“What happens is that HMOs go around and they say to people like me, ‘What will you do this for?’ ” Iwasiuk said. “And then they go to somebody else and say, ‘What will you do this for?’ And they take the lowest bidder.

“At this point, quality is no longer the issue,” he added. “The bottom line is the dollar. Money rules.”

Iwasiuk could be busy again if he would accept less money. But he says he has already cut his rates by more than half, and there comes a point where he will cut no more.

For example, a decade ago, the going rate for a hernia repair was $1,000. Today, Iwasiuk does that surgery for $400, the amount Medicare will pay. HMOs pay even less, he says, and are always pushing for greater reductions.

For that $400, Iwasiuk takes a patient’s medical history, counsels the patient before surgery, arranges for hospitalization, does the surgery, and checks the patient for weeks afterward. Iwasiuk clears only about $200 of that $400, he said, because the rest goes for overhead--his office’s three employees, rent, malpractice insurance and other fixed costs.

“We tend to prostitute ourselves chasing the buck,” he said. “But at a certain point you say, ‘That’s my line.’ If it came to starving, I’d have to reassess. But I’m not starving yet.”

Iwasiuk can still make a good living, he said, because half his patients are senior citizens on Medicare, another 10% have traditional fee-for-service indemnity insurance, and about 40% are covered by reduced-fee managed care plans.

He has no “capitated” contracts that pay a physician the same low fee per patient to potentially serve hundreds or thousands of HMO enrollees whether or not the doctor ever sees them.

“That would be difficult, ethically, for me,” he said. “That puts the physician in a difficult position--the more you do, the less you make.”

Iwasiuk said he has seen firsthand the compromises required by HMO medicine.

On a professional level, he has been involved in disturbing arguments in which patients injured in auto accidents have been transferred from the Santa Paula hospital to a Ventura facility because an HMO stood to lose money if the victim was treated in a nonaligned hospital by a non-contract surgeon.

“I’d be the logical one to do the surgery, because I’m local,” he said. “But the HMOs will say transfer the patient.

“The emergency room doctor and I will say, ‘No, we can’t take that risk.’

“And they’ll say, ‘You just want the money.’

“And we’ll say, ‘If the patient dies en route, it’s our fault.’ That’s not an uncommon battle.”

On a personal level, Iwasiuk hates the friction caused by the heightened competition among doctors for patients. That has cost him a close relationship with Santa Paula’s other general surgeon, Mike Sparkuhl.

They both work in offices just a few feet apart above Santa Paula Memorial Hospital, and they once amicably shared the same pool of local patients. But that essentially ended when Sparkuhl joined a four-surgeon group based in Ventura several months ago.

“We used to work together,” Iwasiuk said. “Now he’s the HMO doc, and I’m not. We’re basically competitors. It’s a shame. But I can empathize: You’re seeing your patients dragged away by some HMO, and you’re saying, ‘What am I going to do?’ ”

Sparkuhl, 52, has traditionally seen himself much the same way as Iwasiuk--as an independent who liked to go it alone on his own terms in a small-town setting.

“We’re just down the hall from each other,” Sparkuhl said of Iwasiuk. “It was a nice relationship. And for the longest time we both agreed we would try to not move in that [HMO] direction. But in my case, it was professional survival.”

A big-city refugee who had moved to Santa Paula for a better life a decade ago, Sparkuhl found his practice in jeopardy as HMOs began to control medical plans in Ventura County. And he didn’t want to move his family again.

“Over three years, half of my practice evaporated,” Sparkuhl said. “I was able to make up some of the loss by working harder and smarter. But there are only so many hours in a day, and you can run only so hard. And pretty soon you hit the wall.”

So Sparkuhl joined a medical group that contracts with HMOs. The group needed a surgeon in Santa Paula and would have recruited another one if Sparkuhl hadn’t joined, he said. Then both he and Iwasiuk would have lost their local patients to an outsider with an HMO contract.

“I love surgery, just like Gus does,” Sparkuhl said. “So you’re willing to jump through a lot of hoops to stay in there.”

As it turns out, Sparkuhl said he thinks he is making about as much money under capitated contracts as he would have as an independent receiving the reduced fees that traditional insurance plans pay today.

“A positive is that I’m now associated with four other surgeons who are not my competitors,” Sparkuhl said. “We try to nurture each other. And that’s a good feeling.

“As for my relationship with Gus, we’re rolling along on parallel paths and we don’t interact the way we used to. We’ve got the patients, and he doesn’t.”

What Iwasiuk does have is more time on his hands. And he is happy about the way he fills it.

Working only 50 hours a week, he now sculpts, gardens, sweats more frequently over a tennis match--and practices for the day when he will retire on his 80-acre citrus and avocado ranch as a gentleman farmer.

“If it keeps getting worse, I will retire sooner than later,” he said. “But my income is still reasonable for what I do. And the other thing is, I enjoy this. I spent a lot of time getting here, so I don’t want to hang it up yet.”

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Disenchanted Doctors

The rapid increase in Ventura County physicians nearly stopped by 1990 with the increase of managed care. The ratio of doctors to patients in Ventura County peaked in 1995, and has dropped slightly since. Some doctors say they are retiring early or changing careers because of the restrictions of managed care.

Total local doctors

1970: 513

1980: 950

1991: 1,347

1992: 1,362

1993: 1,433

1994: 1,442

1995: 1,495

1996: 1,450

1997: 1,448

1998: 1,460

Doctors per 1,000 residents