Critical Condition

By DARYL KELLEY

July 26, 1998 12 AM PT

TIMES STAFF WRITER

There was no denying that HMO medicine was the wave of the future, so Thousand Oaks doctor Kenneth Saul finally jumped in headlong in 1994. He didn’t last long.

A pediatrician with a Marcus Welby reputation for long hours and bedside manner, the energetic Saul stopped accepting new HMO patients within a year because he had trouble referring patients to specialists and felt compelled to cut corners on treatment.

“Now my soapbox mission is to save patients from the HMOs,” Saul, 42, said recently, amid mothers and babies in his bustling waiting room. “The HMO concept doesn’t sound that bad on paper because something needed to be done to control health-care costs. But in practice, it corrupts.”

Saul is among an increasing number of Ventura County doctors--and a growing group of physicians statewide--who are risking their livelihoods to go it alone in this age of cut-rate managed-care medicine. They say they have dumped the most restrictive HMO contracts because the soul of their profession is at stake.

“Through these [capped] contracts, the doctors get paid whether the patient comes in or not,” Saul said. “So in a sense, every patient who walks through the door is a loss. That turns doctors against their own patients. That’s unethical. And it should be illegal.”

Doctors are not alone in this growing backlash against HMOs, which cover most privately insured Californians and about three of every five Ventura County residents with private health insurance.

* Patients, who once had their choice of doctors and could count on seeing specialists, are balking at restrictions that deny or delay care they are convinced they need. And, increasingly, they are paying more out of their own pockets to see doctors of their choice.

“It tears me up the way HMOs are treating people,” said Thousand Oaks veterinarian Leslie Schwartz, whose wife, Toni, suffered through treatments for gall bladder and throat ailments without an anesthetic. “It was agonizingly painful. And I told her I wouldn’t do that to an animal.”

* Nurses, though still the least powerful force in the health-care world, are demanding relief from hospital understaffing, fostered by HMO cuts, that they say often leaves them exhausted and more apt to make mistakes that endanger patients.

“The nurses are really suffering from overload,” said nursing professor Barbara Thorpe of Oak View. “By the time we see patients in hospitals, they’ve been banging on the HMO’s door for months. And they’re in crisis.”

* Even hospitals, though still struggling to stay in business, are occasionally abandoning HMO contracts because they can squeeze no profit out of them. Community Memorial Hospital rejected a new Blue Cross contract two years ago, and St. John’s and Pleasant Valley hospitals did the same thing this month before the insurance company finally sweetened its offer.

“In Ventura County, we’ve got a situation where the hospitals are constantly crunching the numbers, because they’re constantly being forced into the situation where it’s: ‘How much less will you take to keep our contract?’ So quality is not the bottom line,” said Monty Clark, local vice president of the hospital association of Southern California.

A rare nonprofit advocacy group has also sprung up in Ventura County to argue for patients baffled by a bureaucracy that can prosper by denying medical care, or delaying it so long that some patients give up trying to get it. Just 10 months old, the group already gets 25 calls a day.

And, despite an array of laws that make it hard to sue HMOs, an Oxnard law firm is waging war on HMO medicine--and sometimes creating new law by winning big cases and prompting internal insurance industry reforms. That law office receives 120 calls a month from people wanting advice on cutting the red tape of managed care.

“Today, nobody’s happy,” said Dr. Samuel Edwards, administrator of Ventura County Medical Center. “Doctors are angry because they used to be the seat of all power, and now they’re stuck rationing care. Hospitals don’t like it because they’ve had to cut their costs and push their patients out the door. And patients say they’re getting worse care.”

Price of Health Care

Despite the drumbeat for reform, few deny that HMOs--the primary type of managed care--have done what they were created to do.

They have imposed reform on an industry reluctant to cut its runaway costs. The price of U.S. health care rose just 4.4% in 1996, the smallest increase ever recorded, and down from an average of 11.7% a year between 1966 and 1993, the government reports.

That has made health insurance more affordable, especially for owners of small businesses. In California, the national pioneer of managed care, HMO premiums are far lower than traditional fee-for-service insurance plans and hardly rose at all for three years until a flurry of recent hikes.

That is because HMOs take away doctors’ and hospitals’ financial incentive to overtreat patients with costly tests and surgeries, since they don’t get paid more for ordering them. HMOs provide not only cheaper medical care, but also better treatment, they insist, because they encourage checkups and immunizations to keep patients healthy.

“We take care of 18 million people, and provide a very high quality of care for the large majority,” said Myra Snyder, former chief executive of the state’s HMO industry group, the California Assn. of Health Plans.

The strongest sign of that success, she said, is patients’ high satisfaction with HMOs, reflected repeatedly in surveys over the years. About three-fourths of consumers usually say they are satisfied or very satisfied, she noted.

“Those rates continue to be very high,” she said. “But it’s like with Congress, people really like their congressman, but don’t like Congress overall.”

Increasingly, however, patients are not buying the argument that HMOs are as good for their health as they are for their pocketbooks.

Several recent opinion polls show many patients are angry with managed care, and want lawmakers to rein in tight-fisted HMOs.

The most extensive survey yet of managed care in California found last fall that 42% of state residents with medical insurance--nearly all of whom are in HMO or other managed care plans--had a problem with their health plans in the previous year.

“Every patient who comes into my office complains about managed care,” said neurosurgeon Moustapha Abu-Samra, past president of the Ventura County Medical Society. “There’s a lot of anger out there. These people are told they’re going to be cared for, but as soon as they sign up, the limitations are placed on them.”

Proposals for Reform

Sensing this simmering frustration, proposals championed by President Clinton and Gov. Pete Wilson are wending their way through Congress and the state Legislature to establish a patients’ Bill of Rights. About 100 bills to reform HMOs are being considered in Sacramento alone.

Politicians of all stripes are seizing on consumer complaints to make HMO reform the banner issue of the 1998 political season. They are calling for more access to doctors, emergency coverage away from home without HMO approval, a right to an independent review of HMO decisions restricting care, and freedom to sue HMOs--not just doctors--for malpractice.

But the most telling backlash may be in the minds of patients.

“I will never go back,” said Carol Cordano of Camarillo, who spent a full day trying to see her HMO doctor, then was given a drug prescription over the phone by a physician she had never seen. “I was shocked. He knew nothing about me--if I was taking other medications. I think it’s completely unethical.”

HMOs have become the boogeymen of late-1990s American culture--vilified in movies, castigated in party conversation, rued as corporate chiselers that rake off 25% of every premium dollar for ads and overpaid executives.

A dramatic example of patient discontent was beamed to millions on live television in April, when 40-year-old former Thousand Oaks resident Daniel V. Jones unfurled a banner that read, “HMO’s are in it for the money!!” before putting a shotgun to his head on a Los Angeles freeway and committing suicide.

Jones said in a videotape that his HMO had delayed his care for the HIV virus for a month. And Janet Jones of Thousand Oaks said her brother had almost died years before after an HMO sent him home with a severe ache in his side just before his appendix burst.

More mundane are the increasingly common complaints of friends and relatives who say they have languished under what they see as rationed medical care: delays for appointments, diagnoses over the phone, cursory examinations once in a doctor’s office, and the reluctance of HMO “gatekeeper” physicians to approve costly tests or special care.

“I think we’re beginning to realize that we get what we pay for,” said Michelle Hiepler, an anti-HMO malpractice attorney, as she snuggled year-old son Ryan at a health exam at Saul’s Thousand Oaks office. “I spend $50 to get my hair cut, so I can spend $50 on a doctor’s visit.”

Indeed, administrators at the Ventura County Medical Society say that they are seeing more doctors like Saul and more patients like Hiepler.

“More and more physicians are canceling contracts so they can keep their autonomy and care for their patients,” said Mary Carr, executive director of the 500-member medical society. “They’re still a rare breed, but they were almost nonexistent a few years ago. Now I would say they’re 5%, but growing. Just last week, four more physicians told me they were canceling their HMO contracts.”

Ventura family doctor Tom McBreen has made the move. In November, he sent a letter to his patients telling them he would accept no new HMO contracts and asking them to consider other insurance plans.

“HMOs want to hold you off, stall you, change your patient’s medication,” McBreen said. “If a patient has an injured back, we have to do 12 things the HMO wants, and it doesn’t matter what I think. The patients are in pain, and they have to wait. That’s not good medicine.”

Some local doctors have joined the 250-physician Independent Doctors Assn. of California, a grass-roots organization formed last November by doctors who insist on being paid a fee every time they see a patient.

And in Thousand Oaks, 40 doctors have helped found a medical insurance company bent on bypassing HMO middlemen and selling the services of hundreds of local doctors directly to local companies--while avoiding the most restrictive and onerous aspects of HMO medicine.

In particular, these rebel doctors refuse to treat patients covered by so-called “capitated” HMO contracts, where a physician is paid the same small amount for each patient--typically $8 to $30 a month depending on age and extent of responsibility--whether they ever see that patient or not.

Under some contracts, physicians pocket more money if they refer fewer patients to specialists, limit their time in hospitals, treat patients by the cheapest possible means, or get patients to use inexpensive generic drugs.

Although HMOs hide the details of contracts with providers as trade secrets, disclosures in lawsuits have shown that some primary care doctors even have to pay part of the cost of treatment if they refer a patient to a specialist.

So, a doctor’s traditional financial incentive to fully treat a patient has been turned on its head, critics maintain. That puts the doctor in league with the HMO, they argue, and leaves patients as their own best advocate for quality medical care.

“I hate the basic concept of capitation. The incentives to not do medical treatment are huge,” Camarillo physician Richard Loft said.

Loft thinks tight-fisted HMO policy almost killed one of his patients--a 42-year-old Camarillo man who came in with chest pains and needed a stress test.

“The request was held up for three weeks, and on the last day he had his heart attack,” Loft said. “If on Day 1, he would have had his stress test--and we both knew it would be positive--he would have had his angiogram and perhaps the angioplasty that would have prevented his heart attack. He ended up having open heart surgery.”

Degrees of Coverage

Loft thinks most of his colleagues try to do the right thing for their patients, regardless of how they are paid.

But some physicians say that other doctors have adopted a double standard of treatment, where patients whose insurance pays full or partial fees for service are treated sooner and better than those whose HMO contracts are capitated.

In some doctors’ offices, medical charts are flagged so doctors know the patient is covered by a capitated HMO plan. And when calling for appointments, patients are sometimes asked what type of insurance they have.

For those capitated patients--and they are increasing in number--medicine can be an assembly line. Doctors who saw 20 to 30 patients a day just a few years ago, now see 40 or more because they make less money per patient.

And some don’t even pretend that the quality is as high. Many doctors say they work far longer and more quickly than ever before.

“There are volumes and volumes of patients, with about 30 seconds allotted for each one,” said Dr. Ann Kelley, an Oxnard oncologist. “A patient needs to have a relationship with [a doctor]. Somebody who is not that good of a doctor who knows you really well is better than the best physician who doesn’t know you.”

Consumer advocates say that HMOs’ imposition of capitated contracts--first on the family practice “gatekeepers” of the system and now on specialists--is the most troubling trend in medicine today.

“We’ve basically found that these contracts turn doctors against their patients,” said Jaime Court, director of Consumers for Quality Care in Santa Monica.

Robert Reed, a Santa Barbara doctor who heads the California Medical Assn., said capitation is a problem for all but the large group practices that have enough patients to spread the risk of handling a spate of very seriously ill people.

With current rates, doctors are sometimes forced to choose between their own financial well-being and their patients’ health, Reed said.

“That’s the ethical imperative we have,” Reed said. “We just cannot compromise on care. As a result, most groups are having a hard time making it work.”

Yet, a survey released last week by the California Medical Assn. shows that doctors feel compelled to cut corners to make ends meet. Of 900 doctors polled, 16% said that reimbursement or capitation issues frequently influenced their medical decisions. Another 57% said they were sometimes affected by such concerns.

But managed care advocates maintain that doctors hate the HMO revolution because it has forced discipline on an undisciplined profession, and made physicians work harder for their high incomes.

Capitation is necessary, they say, to keep premiums low so HMOs can compete for the business of big companies.

“You can’t imagine the kind of pressure that puts on us and the providers on down the line,” said Maureen O’Haren, acting president of the state HMO industry association.

Nor is it true that physicians roundly reject capitated contracts, she said.

“Physicians and medical groups are demanding capitation,” O’Haren said. “They say they like it because they can count on a certain number of dollars every month so they know their costs and their revenues. So it’s predictable.”

Doctors know their finances are tied to keeping their patients healthy or treating them right the first time they are sick, she said, because poor care brings patients back for more costly treatment.

Mike Lurie, director of managed care programs at Ventura’s Community Memorial Hospital, said capitation can work for patients.

“I think capitation gets a bad rap,” he said. “It provides a great opportunity by shifting the emphasis [of health care] to keeping the population healthy. And if the capitation rate, the insurance premium, is set appropriately, we should be able to live within budgets.”

Quality of HMO Care

Beyond the ethics of capitated contracts, a central issue in the debate over managed care medicine is its quality.

A cornerstone of the HMO ideal is that managed care is cheaper and at least as good as that under traditional health plans because of its emphasis on preventive care. HMOs also monitor quality through “physician report cards” that gauge patient satisfaction and through peer reviews of doctors’ performance.

But critics claim that HMOs are especially bad for patients with chronic illnesses or complicated conditions.

“Say a patient is referred for a brain tumor and it’s malignant,” said Ventura neurosurgeon Abu-Samra. “We want to give you a quality survival for 12 months. But [the HMO’s] position is, ‘He’s going to die in 12 months, why should we operate?’ ”

HMOs are legally required to provide all treatment that is medically necessary. But the gray area between medical necessity and high-quality care is where battle lines are drawn.

For example, some HMOs still refuse to cover $200,000 bone-marrow transplants for advanced breast cancer because they judge the treatment experimental or not very effective.

More commonly, HMOs approve mammograms just once every two years for women between the ages of 40 and 50, although many gynecologists think annual exams are advisable. A similar controversy surrounds how often an older man should be examined for prostate cancer.

Local patients have also complained that they have been denied annual bone scans despite histories of cancer, blood tests to diagnose persistent ailments, MRI brain scans for chronic headaches and skilled in-home care after major injuries.

Some pediatricians also say that infants are being endangered because HMOs do not pay for checkups of breast-feeding newborn babies three days after they first go home. A two-week checkup is common, but by then the babies could be seriously malnourished, critics say.

Choosing a Doctor

Patients want better quality and more choice, according to polls. Indeed, enrollments in more costly Point of Service HMO plans, which give patients broad choice in picking their doctors, are the fastest-growing in the managed care industry.

In Thousand Oaks, Tom Brancati, chief executive of the new community-based, physician-founded insurance company, said he is selling his anti-HMO health plan on its quality.

“What’s happened is that employers had focused almost entirely on cost, and sacrificed quality,” Brancati said. “Now the companies are saying their employees are dissatisfied and quality is more important than cost in retaining good employees.”

To pediatrician Saul, the HMO backlash has come none too soon.

He stopped taking HMO patients, he said, because of what he found when he tried to make the system work.

Right away, a top HMO consultant advised him and others at a doctors’ convention not to be so nice.

“He said, ‘No. 1, never make eye contact with the patient. You don’t want them to like you so much they want to come back and see you.’ He said, ‘Remember, every encounter with a capitated patient is lost money.’

“And he said, ‘No. 2, you want to annoy the patient with access and phone system problems. You don’t want to be so rude that they file a grievance, but you want them so exasperated that when they really need to see you they go to urgent care instead and pay for it out of their own pocket.’

“But what put me over the edge,” Saul said, “were two cases where specialty care was denied. In one, a 2-year-old had a kidney infection and he needed a kidney X-ray. In the other, a 3-year-old was severely jaundiced and needed phototherapy at home. I tried to get the reasons why these were denied, but the medical director would never call me back. So I quit.”

A dozen patients in Saul’s waiting room said they are glad he did.

“I have neighbors who never see their doctors because they’re never available,” said Tami Janke, 37. The former insurance investigator from Moorpark pays for part of her family’s care with cash.

“Dr. Saul meets me anywhere, any time,” Janke said. “He makes house calls, for crying out loud. He gives us the old-fashioned health care I want.”

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 describe doctors and patients who have grown frustrated--and in some cases given up--on a health-care system they believe profits by delaying or denying care to patients. Future stories look at how one physicians group makes HMO medicine work and how consumers can get what they want from HMOs.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

HMO BY THE NUMBERS

Health Care Coverage

Ventura County

(as percent of population)

Health Maintenance Organizations: 42.4%

Uninsured (under age 65): 23.6%

Other managed care/and traditional fee for service: 19.2%

Non-HMO Medicare: 7.9%

Non-HMO Medi-Cal: 6.9%

***

California