Quality Control

Dr. John Keats doesn’t kid himself. As medical director of Ventura County’s oldest HMO-affiliated physicians group, he is a lightning rod for complaints.

He hears them when he goes to the store. He fields them at parties. His barber quizzes him on the quality of HMO medicine.

“I’m frequently challenged by my friends and acquaintances,” Keats said. “They tell me about problems they’ve had navigating this new system of health care. I tell them I don’t think managed care is the evil people have made it out to be.”

As the chief doctor at Buenaventura Medical Group, Keats endures amid a continuing consumer backlash against the restrictions of HMO medicine. So does his 42-physician group, which manages care for about 50,000 patients out of five spartan clinics in Ventura, Oxnard and Camarillo.

Indeed, Buenaventura--with its size and history--stands as a good local example of how and why managed care has grown locally over the last decade.

As an efficient provider of medical care, Buenaventura has helped cut costs in an industry once widely considered to be rife with overtreatment and waste. That has made health care more affordable and available to more people.

The group’s employment and compensation practices, and the way it reviews patient requests for expensive special services, are also typical of an industry bent on providing only medically necessary care.

Doctors and nurses at Buenaventura say they routinely get approval for such treatment, regardless of cost. But detractors say that Buenaventura stands for the rationing of care in a system where quality suffers.

“This image problem stems from patients’ perception that the [HMO] doctor is more concerned about making money than in improving their health. And I’m not going to tell you there have not been problems or abuses,” said Keats, 44, a Buenaventura doctor since 1985 and medical director for the last three years.

“But managed care, when done properly, rewards physicians for keeping their patients healthy,” he said. “To deny care will cost you money in the long run.”

That patients should question the motives of doctors--traditionally their strongest medical allies--results from a “capitated” payment system under which most HMO doctors receive the same small amount per patient each month regardless of how much care they provide. In addition, if they spend less than expected on specialists, hospitals and prescription drugs, they sometimes receive more money from so-called “risk pools.”

In such a system, critics charge, physicians are pitted against patients, and family doctors, the “gatekeepers” of the HMO system, are encouraged to undertreat those they’ve sworn to cure.

The Buenaventura group is made up mostly of such gatekeepers, although 10 staff doctors are specialists--including a surgeon, a psychologist, a podiatrist, a radiologist and a dermatologist.

So how good are Buenaventura’s doctors? How satisfied are their patients?

Patient advocate Pamela Hasner, who runs a local nonprofit HMO hotline, says Buenaventura seems to get more than its share of complaints. In fact, Hasner said, she started her hotline in 1997 because of problems she had in getting Buenaventura to respond to her own life-threatening heart and cancer problems.

“We get a lot of complaints about Buenaventura,” she said. “Patients will think there is something seriously wrong. But the doctor will say, ‘No, that is not necessary right now. Let’s hold off. Let’s wait.’ Which leaves the patient very frustrated.”

The survivors of several Buenaventura patients who died during treatment also said in interviews that they think their relatives had a hard time getting the care they needed.

“In my opinion, an HMO killed my father,” said physical therapist Erin Keane, daughter of William Keane of Port Hueneme, who died last year at age 75. (Keats defends the HMO’s handling of the case, saying Keane was a onetime cigarette smoker who died from diseases resulting from chronic lung problems, not because of poor treatment.)

Some local doctors also think that Buenaventura does the minimum required in treating patients--that the group is fine as long as the patient is healthy or does not need costly extra care.

One veteran doctor who has worked with the group for years held his thumbs down when asked about the quality of Buenaventura’s care. “They were once pretty good,” he said.

Ventura gynecologist Ronna Jurow sees it the same way: “They look good on paper. They have the credentials. But their depth of investigation leaves something to be desired. And I’ve known of cases where they wouldn’t extend themselves to treat a patient until pressure was put on them by the patients’ families. Personally, I wouldn’t want to be treated by them.”

‘High Regard’ for Buenaventura

Conversely, it is easy to find doctors who admire the quality of medical care at Buenaventura and patients who say they’ve never been treated better.

“I’d be mighty proud to be associated with them. I hold their medicine in high regard,” said Samuel Edwards, chief administrator at Ventura County Medical Center. “My family has been cared for by Keats personally.”

Patient Naomi Larsen, a 42-year-old secretary and single mother, said her doctors at Buenaventura made the most frightening period of her life seem manageable.

After a routine blood test for cholesterol revealed leukemia in April, Larsen was booked immediately into the renowned City of Hope cancer center in Los Angeles County, scheduled for a bone-marrow transplant and told not to worry about a thing.

“It’s pretty amazing what they did for me,” Larsen said. “I’m sitting at my desk right now, and I still can’t believe how fast I was taken care of physically and mentally. They haven’t hesitated one bit to give me whatever I need. And I was told I would never see a bill. It’s all just been a weight off my shoulders.”

Keats has grown accustomed to questions about Buenaventura’s physicians and accusations that managed care is substandard. He says his doctors are excellent.

“The way I answer that question is that 100% of our physicians are board certified, while nationally it’s 60% to 65%,” Keats said.

That means that Buenaventura’s physicians have all received extra training in their fields and passed a rigorous set of exams. A number of the group’s family doctors are graduates of the UCLA family practice residency program at Ventura County Medical Center--recognized as one of the best in the nation.

Many come from other top training programs.

“The average physician has been with us for 11 years, so they do stay for the long haul and the patients do know them personally,” Keats said.

Patient satisfaction is gauged every two years through an extensive survey, Keats said. Most patients consistently say they are satisfied or very satisfied with their overall care, especially with Buenaventura’s seven pediatricians, he said.

Doctors are rated individually, as well.

“We look for ways to improve satisfaction in those physicians who don’t score as well,” Keats said. “If we have physicians who are not performing up to the standard, they can be counseled or disciplined, just like any employee.”

Out of 50,000 patients, there will always be some who are not satisfied, he said. Keats said he is responsive to their complaints.

Indeed, patient advocate Hasner said Keats does move to correct problems when she calls him about them.

“We’re not a perfect organization. There are physicians who do not treat patients the way they should. And I know there are problem cases,” Keats said. “What I say to my friends when these cases come up is, ‘What happened to the good old-fashioned concept of malpractice?’ Doctors had been doing bad things long before managed care was ever known as a concept.

“I honestly don’t think we do a bad job,” he said. “And the other side of the coin is how many patients had their lives saved through the type of care we practice.”

5 Decades as a Physicians Group

In many ways, Buenaventura is an archetype HMO provider of health care--just older and larger than most.

Founded in 1950 with four doctors as the county’s first multi-specialty physicians group, Buenaventura grew most during the rapid HMO expansion in the late 1980s and early 1990s--swelling from 22 doctors in 1985 to 60 in 1992.

It has shrunk since then, as more and more physicians groups have formed to compete for HMO contracts. It lost some of its doctors, too, when the group sold its physical assets in 1996 to the giant Unimed Management Co.

Buenaventura is typical of HMO-contracted groups that rely on a core of staff physicians who work together in company clinics, receive salaries and usually work standard eight-hour shifts.

The group’s doctors are also its owners. They share in the profits in a good year because their salaries stand to increase. But they also bear the risks of a bad year--when competition lowers insurance premiums or when the group must care for many very sick patients. For example, they cut their salaries by 10% in 1996 to balance a budget of nearly $40 million, Keats said.

Buenaventura reflects key trends of managed care.

Many of its physicians were once solo practitioners who joined a medical group because they didn’t like the business aspects of private practice, liked the concept of managed care, or feared that managed care would eventually run them out of business.

Buenaventura has also increased its staff of nurse practitioners and physicians assistants from one to 10 since 1994. These highly trained “extenders” of the medical staff function like doctors, but have less education and make less money.

Critics say this erodes medical quality, but Keats says it spreads limited resources and allows patients to be treated for simple problems on the same day they call for an appointment.

Buenaventura also uses peer committees for “utilization reviews” to decide whether special patient treatments requested by doctors are really necessary. More routine treatments such as X-rays and blood tests are done in-house and do not require special authorization.

Range of Doctor Salaries

The way Buenaventura doctors are paid includes features common in HMO contracts.

As with the nation’s largest HMO, Kaiser Permanente, Buenaventura’s doctors receive salaries--from $110,000 to $130,000 annually for family doctors and $180,000 to $250,000 for specialists, Keats said.

Under contracts with six large insurance companies--Health Net, Aetna, Blue Cross’ California Care, Care America, Benefit Provider Services and PacifiCare--clinic doctors receive about 85% to 90% of their HMO revenue in capitated payments.

These premiums are small--usually $35 to $40 a month for each young person to $140 a month for a senior citizen--and pay for regular office visits as well as referrals to specialists and hospitalization.

Part of the doctors’ salaries also comes from pools of money that represent 10% to 15% of HMO premiums. These dollars are held back by the insurance companies and are paid to Buenaventura’s doctors only after actual costs of hospitalization and pharmaceuticals are deducted.

Keeping patients out of high-priced hospital rooms is a key goal of managed care in general, because hospital care was overused in the past. Now patients come in sicker and are discharged more quickly.

“We’re better able to care for people with relatively minor illnesses through home health with visiting nurses and better drugs,” Keats said. “The hospital is reserved for patients who are truly very ill.”

And once in the hospital, the patients are treated quickly. “A gall bladder operation used to be seven or 10 days, but now they’re out in 24 hours with [better] techniques,” Keats said.

Buenaventura has also shifted responsibility for hospital care from primary physicians to hospital-based doctors because of the group’s high readmission rate of Blue Cross patients in late 1995.

As a result, readmissions within 30 days dropped from 12.7% of discharged patients to 6.7% in 1997, Keats said.

Some of these managed-care strategies are under attack. Capitated insurance payments and risk pools are controversial because they provide a monetary incentive to give patients less care--especially in hospitals or by out-of-office specialists.

Keats says it takes a large group like Buenaventura to make capitation work right because the budget is large enough to absorb a case that costs hundreds of thousands of dollars.

“Capitated care can only be done, or best done, in a setting of a large group like ours,” he said.

Sparing the Amenities

Patients flow through the spare waiting room at Buenaventura’s family practice clinic near Ventura College. They sit on sturdy chairs beneath plain white walls. The room feels utilitarian.

It is not by accident. Administrators know that patients don’t want to think their health insurance pays for fancy offices.

Gayle Wilhite, 81, appreciates the place just the way it is. She’s dressed like a nurse in a white sweater and white slacks. Her 83-year-old husband, Wayne, smoked for 50 years. Now he’s seeing his doctor.

“The last problem he had was when he picked up pneumonia,” said Gayle, who had spent her married life in Orange County, then Cambria, before moving to Ventura in retirement. “They kept him in the hospital eight days. We’re talking about an HMO, but they kept him in eight days, and you know that’s a little long for an HMO. But they really took care of him.”

Just a month before that, Wayne had triple heart bypass surgery, Gayle said. “They did right by him then, too,” she said. “You and I both know any of this is only as good as your doctor. But both of us have good doctors.”

At the top of that list, Gayle said, is Jess Wagner, a refugee from a small-town practice in Crescent City. “I’ve never seen more concern for a person than Dr. Wagner shows for my husband,” she said.

Then there’s Gayle’s doctor, Andrea Parmelee, an internist who has studied geriatric medicine. “She believes in preventive care. She sees I have all my checkups. No wonder I stay well,” Gayle said.

It’s been six years since Gayle and Wayne Wilhite moved here. Not long after they arrived, they learned about Buenaventura’s coverage while at a hospital to see their son-in-law. “The man in the next bed, he said, ‘Look what you’re paying, and all this doesn’t cost me a thing.’ So we joined, and my brother joined, and my other brother joined,” Gayle said.

The Wilhites enrolled with Secure Horizons under that HMO’s contract with Medicare. As Secure Horizons’ local provider, Buenaventura gets about $140 a month for Gayle Wilhite and the same for her husband.

For that, the group provides all their medical care.

“We’ve been real blessed,” Gayle said. “I’ve never seen a group like this. This group treats you like a human being.”

Rationing of Care

It didn’t work that way for William Keane, says the family of the 75-year-old retired salesman who died of heart and kidney failure last fall.

When Keane began suffering from tightness in the chest and chronic coughing in the fall of 1995, his daughter, Erin, a hospital physical therapist, said she witnessed personally Buenaventura’s rationing of medical care to a Secure Horizons patient.

“It was October or November of 1995 and my father kept complaining that he couldn’t breath,” she said. “Finally, he was coughing so much they gave him some cough medicine. They said he should get an X-ray, but their equipment was broken down. So he didn’t get one until the day they admitted him to the hospital with pneumonia 4 1/2 months later.

“My father lost the lower portion of his right lung. He got sicker and sicker after that and ended up carrying little tanks of oxygen for the rest of his life,” she said.

During his last 18 months, his daughter said, Buenaventura doctors denied William Keane care as basic as a $12 elastic stocking to keep his leg from swelling and as critical as a referral in his last month to a physician who specializes in lung problems.

“If he had gone to a pulmonologist, it would have been very different,” she said.

Although he missed two doctor’s appointments in his last month due to severe illness, no one called from Buenaventura to see if he was all right, she said. When her father managed to keep an appointment 11 days before he died, the Buenaventura “gatekeeper” initially did no examination at all.

“We went in because my husband said his heart hurt,” widow Gloria Keane remembered. “The doctor said, ‘That’s from your coughing; it’s your rib cage.’ And he just talked to my husband. He didn’t check anything. Finally I said, ‘Aren’t you going to check his heart and lungs?’ ”

Last Nov. 14, the day after William Keane missed his final doctor’s appointment and the day before he died, Gloria Keane told her husband’s doctor that he desperately needed some help.

“He said, ‘OK, we’ll send somebody out to see your husband today.’ But they never did,” she said.

After waiting all day, Gloria called an ambulance for her husband at 7 p.m. He died seven hours later.

“I did get a call the next day from the visiting nurse,” Gloria Keane said. “She said, ‘Would it be OK if we sent somebody out to see your husband today?’ I said, ‘No, he’s dead.’ ”

“We miss him so much,” Erin Keane said. “And we want to protect another family from what we went through.”

Buenaventura’s Keats said the Keane case, and several others that ended when patients died, are tragic, but are not examples of poor medical care.

William Keane’s chronic lung disease--caused by an old smoking habit--was diagnosed when he first joined Buenaventura in the early 1990s, Keats said. From then on, he received care typical of patients with such an ailment, the doctor said.

“This condition is essentially not curable,” Keats said. “You try to alleviate the symptoms the best you can, but the patient does tend to deteriorate over time.”

Gloria Keane said Keats has it wrong. She said her husband never had trouble breathing or a coughing problem until his pneumonia went untreated for 4 1/2 months in 1995 and 1996.

“We thought he was in good health,” she said.

Keats said Keane’s medical charts, and a handwritten medical history by the patient, show otherwise. Keane died of heart and kidney failure exacerbated by his smoking, the doctor said.

“I’m not taking anything away from the pain these families feel, but there’s a tendency to blame the messenger,” he said. “These cases are tragic. But people do get very serious diseases and die despite the best intentions of the best physicians in the world.”

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About This Series

“The HMO Backlash” is a three-day series examining how the people of Ventura County have fared in the managed-care revolution of the last decade. Today’s stories look inside a physicians group that is trying to make the HMO system work. Earlier stories looked at doctors and patients chafing against the system’s restrictions. Tomorrow, doctors, lawyers and consumer advocates explore ways to navigate the HMO system.

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HMO by the numbers

How a Typical HMO Works

1. Employer negotiates contract with HMO for basic health services.

2. HMO contracts with medical network for patient services.

3. Employee chooses basic HMO plan.

4. Employee goes to primary care “gatekeeper” physician, chosen from network, for preventive care and when sick. Doctor is typically paid the same small fixed “capitated” rater per patient per month, regardless of amount of treatment.

5. Examination confirm illness and indicates need for special treatment.

6. Doctor asks physician group committee for approval for (a) extra medical tests; (b) referral to physician specialist; (c) special therapy; (d) hospitalization; (e) surgery.

7. Physician group screener or screening committee decides whether these special, more costly treatments are “medically necessary.” If deemed necessary, the duration of treatment is specified. A second approval may be required to continue special treatment.

8. If treatment is rejected, patient can appeal for internal review of decision, or doctor may resubmit request.

Critics say HMO policies ration care by erecting bureaucratic barriers and pit doctor and patient against each other because physicians who treat less may make more money. HMOs say they are changing their plans to make access to specialist easier and that capitated payments give doctors a guaranteed monthly income and more freedom in managing their practices.

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Effects of Managed Care at Ventura County Hospitals

Under the cost-cutting or managed care, patients are sicker when hospitalized and are released more quickly . Newborn babies also spend fewer days in the hospital, and more surgeries are done on an outpatient basis. Emergency room patients are sicker because it is more difficult to be hospitalized.

1991

Average hospital stay in days: 6.9

Hospital days per 1,000 residents: 526

Well baby days in hospital: 27,438

Inpatient surgeries: 17,935

Outpatient surgeries: 17,346

Emergency room admissions: 20,205

Emergency patients critical: 6.5%

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1992

Average hospital stay in days: 6.4

Hospital days per 1,000 residents: 602

Well baby days in hospital: 19,466

Inpatient surgeries: 17,654

Outpatient surgeries: 17,407

Emergency room admissions: 20,046

Emergency patients critical: 8.9%

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1993

Average hospital stay in days: 5.2

Hospital days per 1,000 residents: 470

Well baby days in hospital: 17,896

Inpatient surgeries: 16,373

Outpatient surgeries: 15,499

Emergency room admissions: 10,106

Emergency patients critical: 6.9%

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1994

Average hospital stay in days: 4.9

Hospital days per 1,000 residents: 512

Well baby days in hospital: 15,943

Inpatient surgeries: 15,634

Outpatient surgeries: 18,031

Emergency room admissions: 18,817

Emergency patients critical: 4.9%

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1995

Average hospital stay in days: 4.8

Hospital days per 1,000 residents: 494

Well baby days in hospital: 15,989

Inpatient surgeries: 13,332

Outpatient surgeries: 14,457

Emergency room admissions: 19,247

Emergency patients critical: 12.1%

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1996

Average hospital stay in days: 4.8

Hospital days per 1,000 residents: 484

Well baby days in hospital: 15,470

Inpatient surgeries: 16,755

Outpatient surgeries: 17,144

Emergency room admissions: 21,139

Emergency patients critical: 11%

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HMO and Managed Care Glossary

Until recent years, most health insurance was delivered through traditional fee-for-service plans. Today such high-cost, old-fashioned indemnity plans are a small fraction of the total inVentura County and California, and are steadily losing their share of the market nationwide. The norm today are cheaper managed health care plans such as heath management organizations (HMOs), preferred provider organizations (PPOs) and point-of-service HMOs.

In California, the most common type of HMO is the staff model, such as Kaiser Permanente’s and the independent practice association (PA) model, such as Health Net’s. These IPAs are usually loose-knit networks of physicians with a common administration to manage insurance contracts. Some models are a mix of the staff and IPA models.

In HMOs and most PPOs, the patient chooses a primary care doctor, such as a family physician, pediatrician or obstetrician-gynecologist. These “gatekeeper” doctors coordinate referrals to specialists and requests for medical tests. Responding to a backlash to care restrictions, some managed care plans are allowing more freedom to choose doctors and refer themselves to specialists, but at a higher cost.

Types of Health Plans

HMO: Staff Model: This HMO type employs doctors, nurses and other medical professionals to provide services at plan-owned hospitals and clinics. The prototype is Kaiser. Patients pay low premiums and have few out-of-pocket expenses, but must choose doctors within the plan. Doctors are paid straight salaries, but may also receive group bonuses at the end of the year , if the HMO makes money.

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HMO: IPA Model: An independent practice association is a partnership or association of physicians who offer their services collectively to large provider groups and HMOs. Patients may choose from a list of doctors who contract with the larger provider group or HMO. Doctors usually work in their own offices and typically see patients from several HMOs and may also see patients covered by PPO and traditional fee-for-service plans. HMOs usually pay doctors a set “capitated” amount per month for each patient regardless of how much care the patient receives. Critics, including many doctors, say this method may undermine the doctor-patient relationship because it encourages undertreatment. Supporters, including the HMOs, say this method staunches traditional overtreatment of patients and allows doctors to manage their practices on a guaranteed amount of money.

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PPO: Preferred Provider Organizations: PPOs are a composite of HMO and indemnity plans. Patients choose from a network of doctors and hospitals, but the choice is usually wider than in HMOs. And some allow patients to go directly to specialists within the network without seeing their “gatekeeper” first. Doctors and hospitals discount their fees, but are paid each time service is rendered. The patients usually co-pay 10% to 20% of the bill. They may go outside the network, but at a higher cost.

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INDEMNITY: These traditional fee-for-service plans are the least restrictive because the patient pays full rate for doctor and hospital services. Because of expense, this type of plan has retained only a small share of the market in Ventura County and California. These plans were criticized for encouraging doctors and hospitals to overtreat patients and pushing up the cost of health care.