Health Care Industry’s Fiscal Crisis Creates Turmoil for Insured Patients
While premature twins Paige and Hannah Rafferty remained under intensive care last fall, their parents received upsetting news: The babies, weighing just over 3 pounds, would need to go to a cross-town Sacramento hospital.
The ultimatum from the Raffertys’ health maintenance organization had nothing to do with the quality of care the babies were receiving. Instead, it was about money and health care bureaucracy. A medical group serving the Rafferty family had gone broke, triggering a chain of administrative shuffles that culminated in the decision to move the twins.
With the aid of an advocacy group, the twins’ parents, Dave and Lynmarie Rafferty, prodded the HMO to back down, and the babies stayed put until they were ready to go home. All the same, the family’s story reflects the upheaval, aggravation and perhaps even medical risks that more consumers face amid the growing economic troubles in the nation’s health care industry.
This month’s state takeover of MedPartners Provider Network, an HMO subcontractor serving more than 1 million Californians, was just the latest in a series of crashes by major health care organizations. Still, no one--not health care industry executives, Washington policymakers or consumer advocates--has a good sense of how the large-scale financial problems will be resolved.
All that appears certain is that turbulence lies ahead for patients, doctors and others whose lives are touched by the health care industry.
As a result, in an age when HMO doctor-referral snags and other hassles already are considered routine, still more consumers are likely to endure delays in receiving health care. It also means that more people could be forced to switch doctors, breaking up important physician-patient relationships.
“This is the carnage you see when you think you can run health care like a commercial enterprise instead of as a public service. The public and physicians are learning a painful lesson about the way markets work,” said Kevin Grumbach, a professor of family medicine and a health policy researcher at UC San Francisco.
Nationally, the disruption in what health care experts call “continuity of care” was a significant and worrisome phenomenon even before the current health care industry shakeout began. In an Ohio study conducted in 1994 and 1995, one-quarter of patients in managed-care programs had been forced to switch doctors for insurance reasons in the previous two years.
(Managed care, including HMOs and similar plans, is the dominant form of health care coverage today. The plans generally require consumers to choose from a limited list of doctors and to secure advance authorization for many services.)
Even when the forced switching causes less emotional trauma than the Raffertys endured, there are disturbing consequences. The Ohio study, conducted by Case Western Reserve University researchers, reported that patients forced to change doctors were less satisfied with their physicians’ knowledge of their medical histories and needs.
Other research has shown that patients with shorter-term ties to their doctors are more likely to be hospitalized and less likely to take their medications properly. “The patient-physician relationship is more than ‘feel-good’ stuff. It actually makes for better care,” said Grumbach, who also practices as a family physician in San Francisco.
Much, if not most, of the forced doctor-switching in recent years has resulted from employers cutting deals with new, less expensive health plans to cover their workers. In other cases, consumers themselves have changed health plans--and doctors--rather than pay the higher cost of continuing in their existing program. Experts fear that even more consumers will have to switch doctors because of the financial instability of some health care firms.
Two Major HMOs Fail in New Jersey
Just take a look at New Jersey, where two major HMOs failed last year, creating havoc that regulators in California and other states would like to avoid. In the fallout, doctors remain unpaid, dozens of neighborhood health centers are closing and thousands of patients are scrambling for new health care coverage.
“It’s high anxiety,” said Edward J. Gold, an oncologist who treated patients with HIP Health Plan of New Jersey, the bigger of the state’s two recent HMO failures. “Many patients are afraid. They don’t know what’s going to happen.”
In the case of the Rafferty twins, the threatened hospital transfer was linked to last year’s bankruptcy of FPA Medical Management, the physician group that employed the family’s primary-care doctor.
The demise of FPA, with more than 400,000 members in California, forced the primary-care doctor to switch medical groups. That led the doctor to affiliate with a new hospital. But when the HMO said those changes meant that the twins would have to be transferred, the parents resisted.
The Raffertys did not want to break the close ties they had developed with the medical staff at the hospital, especially when it would mean putting Paige and Hannah in the care of people less familiar with the twins’ histories. But the HMO told the Raffertys that they might be responsible for all future hospital-related costs--expenses that wound up totaling hundreds of thousands of dollars--if they refused to allow the babies to be transferred.
HMO officials “were out of bounds making those requests of us,” Dave Rafferty said.
As it turned out, the twins were able to keep their doctors and stay in the same facility for the remaining 30 days that they required hospitalization. In all, they spent 50 days there. Today the twins, born 10 weeks early, are 6 months old and doing well.
Representatives of Health Net, the Woodland Hills-based HMO that covers the Rafferty family, said they called for the hospital transfer only after doctors determined that the babies were stable.
Still, Health Net spokesman Ron Yukelson called the decision an aberration and expressed regret for the anxiety it caused the Raffertys.
‘There’s Clearly Reason to Be Anxious’
He said the vast majority of Health Net members who had used FPA doctors were able to keep their primary-care physicians and were transferred smoothly to new medical groups. Yukelson said Health Net expects to be able to do the same with its members who use MedPartners doctors, if state officials overhaul the medical network.
“We learned a lot from the FPA situation, and one of the things we learned was to watch our medical groups a lot more closely from a financial perspective,” Yukelson said. “There’s clearly reason to be anxious that we’ll continue to see physician groups teetering on financial insolvency.”
For a decade or so, many HMOs and HMO subcontractors, such as MedPartners and FPA, gobbled up competitors and saw their stock market values soar on Wall Street. But in recent years, cost-containment pressures grew and a shakeout ensued.
William Sage, who teaches health care policy at Columbia University Law School, said recent failures of health care firms could have “a domino effect in the industry.” But he and others said that failures in the health care industry would not be as cataclysmic as the 1980s’ savings-and-loan crisis.
“The long-term health care industry is more stable,” Sage explained. “The entities that are most vulnerable tend to be contractors that have been the most aggressive in terms of growing their companies, but the dollars that have been gambled are much smaller.”
Californians Discover Medical Delays
MedPartners’ parent company, despite expanding rapidly into a vast organization, also succumbed to economic pressure in California. Now, even though its subsidiary is in the hands of a state-appointed conservator, some of the company’s California members are encountering delays in receiving care.
For example, some patients scheduled for chemotherapy last week had their treatment delayed amid a dispute between MedPartners and a disenchanted customer, Blue Cross of California.
What’s more, services such as X-rays, mammograms and ultrasounds have been delayed in many cases because outside suppliers balked at continuing to do business with MedPartners. Some elective surgeries also have been postponed indefinitely.
The chaos in California illustrates how the health care system’s bureaucratic hassles--so commonly blamed on HMOs--often actually stem from the actions or mishaps of lesser-known intermediaries, including doctors’ groups and HMO subcontractors.
Last year, doctors had to weigh whether to continue treating members of FPA after it became clear that the physicians might never be paid. In all, FPA owes doctors an estimated $60 million. By failing to pay its bills, FPA “put the patient in the middle,” said Thomas W. Self, a San Diego doctor specializing in pediatric digestive diseases.
Self, who is owed $20,000 by FPA, said he continued treating his 80 FPA patients. “The money is certainly important to stay in business but not important enough to have to say, ‘Gee, Mrs. Brown, because your health plan is bankrupt, we’re not going to see your little son or daughter.’ ”
But not all doctors feel the same way. In New Jersey, some private doctors who once accepted HIP enrollees are turning them away--because the physicians are still owed $16 million.
Other patients are continuing with their HIP doctors temporarily while they shop for new coverage.
Under pressure from outraged patients, a New Jersey judge provided for HIP’s 165,000 members to receive care from their current doctors for anywhere from 30 to 120 days beyond the HMO’s scheduled shutdown Wednesday. The longest extensions went to people with mental illnesses, chronic diseases and life-threatening ailments.
Still nervous, though, are HIP members who pay for coverage out of their own pockets. For example, 54-year-old Fran Rosenfeld of Highland Park, N.J., worries that she will not be able to afford new insurance because of her preexisting condition: breast cancer. “What a mess,” Rosenfeld said.
What’s more, HIP members battling cancer and other long-term illnesses will need to have treatment reauthorized by their new primary-care physicians.
“It’s not fair,” said Dorothy O’Neil, 48, who has cancer of the uterus. She now might be forced to change doctors after receiving treatment from the same oncologist for five years. “You put all your trust in your doctor, and then they snatch him away.”
* NO OVERSIGHT: Officials have no plans in place to deal with the growing financial problems of health care. C1
