Health Net to Drop Big M.D. Group

Health-care insurer Health Net of California said Friday that it will sever its ties with St. Joseph Health System of Orange at the end of the year--a move that could force more than 31,000 Health Net members to find new doctors.

Health Net, one of the state’s largest health maintenance organizations, said it decided to leave Orange County’s biggest physician network because St. Joseph would not reduce contract costs after losing a major medical practice.

Bristol Park Medical Group, which accounted for 40% of the doctors in the network, left St. Joseph last month to set up an independent operation.

Without Bristol Park, Health Net members no longer were getting access to the wider group of physicians that the HMO had expected under its agreement with St. Joseph, said Health Net spokeswoman Lisa Kalustian.

“It’s like paying in advance for a five-course dinner for your family, only to have the restaurant say, ‘Oops, well, we’re out of appetizers and desserts,’ ” Kalustian said. “Our members don’t have access to 40% of the network anymore, and that is not a workable situation for us. It’s unacceptable.”

About 52,000 Health Net members have primary care physicians through St. Joseph, and the HMO said at least 21,000 of them will be able to remain with their doctors through other existing contracts.

Health Net had hoped St. Joseph would adjust the contract to make costs “more in line” with the services now available, Kalustian said, but the medical network--which also runs hospitals across California--refused.

Beginning Jan. 1, Health Net’s members will no longer have covered access to St. Jude Medical Center in Fullerton, St. Joseph Hospital of Orange or Mission Hospital Regional Medical Center in Mission Viejo because they are all operated by St. Joseph Health System, Kalustian said.

Joe Randolph, chief financial officer for St. Joseph, said he was both saddened and surprised by the announcement. Roughly 10,000 St. Joseph employees are enrolled with Health Net, he said.

“I’m extremely disappointed, as this decision will certainly affect many members and disrupt their patient-physician relationships,” Randolph said.

He pointed out that Health Net has already entered into an agreement with Bristol Park and said the HMO’s termination of the St. Joseph agreement wasn’t necessary.

Health Net officials, however, said the issue comes down to members not getting what they’re paying for and St. Joseph not accommodating them.

“We’re now forced to pursue a relationship with Bristol Park on our own, in the best interests of our members, when we were supposed to have access to Bristol Park through St. Joseph in the first place,” Kalustian said.

St. Joseph last fall jettisoned a dozen patient health plans, saying it was losing $45 million a year on low-paying HMO contracts. The largest HMO to be released was PacifiCare Health Systems Inc. in Santa Ana, which insured 114,000 St. Joseph patients.

At the time, medical industry experts said the move was part of a continuing struggle between medical providers and HMOs.

St. Joseph maintained contracts with Aetna USHealthcare, Blue Shield of California, Blue Cross of California and Cigna Healthcare of California. The network also negotiated with Health Net to become the fifth plan to join the group. Health Net signed an agreement with St. Joseph in October that would have led to a five-year contract.

Health Net, which is based in Woodland Hills, has 2.4 million members statewide. It said it will give members more information in the coming weeks. Commercial members with questions may call (800) 522-0088, and Medicare members may call (800) 275-4737.