Mismanaged Care?

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When HMOs came to San Diego in 1982, they significantly discounted physicians’ fees and put in place capitation—where doctors receive a certain amount of money annually to cover a patient’s needs. PPOs—preferred provider organizations, a variation on the HMO—pay a portion of doctors’ fees each time they see a patient or perform a procedure. Most doctors prefer the PPO system and blame capitation for managed care’s woes. For young to middle-aged patients, HMO primary care physicians receive about $60 a year to cover care. (The amount given for seniors varies but can be considerably higher.)

The premiums patients and employers pay are too low to cover the cost of care, say local doctors, and with capitation, there’s no taking into account the differences between patients. For example, Gary Woodall, an internist in Hillcrest, sees many patients with HIV. He says the dollar amount HMOs give him for each patient doesn’t take into consideration how often he sees them. Most of his patients are chronically ill, and Woodall sees them many times a year.

“I’m working harder than ever to take care of some very sick patients, and I’m punished for it,” he says. “Capitation rewards doctors who underutilize, who see patients less and spend little time with them, who don’t send them for tests or to subspecialists.”

Five years ago, Woodall left the Sharp Rees-Stealy medical group and began his own practice with another doctor so he could spend more time with patients. He’s making one-third of his former salary. “I have sold my car, my stocks, everything. I’m in a huge amount of debt. People need to get rid of the idea that doctors are rich,” he says.

Woodall says he’ll stay in practice as long as he can afford to, but lots of other good doctors have left San Diego over the past decade. Others simply stop seeing HMO patients.

Serita Eastman, a developmental and behavioral pediatrician in Del Mar, was forced to leave her practice in 1999 when she ran afoul of HMOs. Since the early ’70s, Eastman’s specialty has been attention and behavioral disorders. Diagnosing these patients often requires getting detailed information from the child’s family and teachers, as well as seeing the child several times. But HMOs told Eastman she would be paid the same whether she spent five minutes or three weeks with a patient.

“They weren’t interested in the fact that more complex problems require more time with patients, and believed any pediatrician could handle these problems, whether or not they had my expertise,” says Eastman. “They actively discouraged me and the other doctors in my practice from spending too much time with patients.”

Eastman—whose father, William Doyle, was the first pediatrician in La Jolla and whose mother, Anita Figueredo, was the first female surgeon in San Diego—says her partners were losing money because she spent time with patients. “I wound up leaving the practice and going solo. Every one of my patients agreed to see me privately, paying out of pocket,” she says.

Tom Self, a pediatric gastroenterologist fired from his medical group in 1995, says many HMOs “look at money first, not patients.” He sued his former medical group and in 1998 was awarded $2.5 million. Part of the evidence in his trial was a letter from a managed-care organization to the head of his medical group saying patients shouldn’t be referred to Self because he didn’t “understand how managed care worked,” ordered too many costly tests and spent too much time with patients.

Even doctors who feel relatively well-served by HMOs concede the system is underfunded. Jerry Penso, a family practice physician with Sharp Mission Park Medical Group, says HMOs encourage him to be more efficient but don’t force him to compromise care. He says for the vast majority of patients, HMOs work well.

However, Penso’s biggest frustration is that HMO rates of reimbursement in Southern California are about 30 percent lower than rates in other parts of the country. “There’s not enough money coming in at the top to spread around to physicians and hospitals and pharmacies,” he says. “We need more resources here to continue to provide high-quality care.”

Because they don’t know what their medical care actually costs, many patients still feel they pay too much. Woodall recalls having to use collection agencies to obtain his $10 copay. Ted Mazer believes a fee-for-service plan with oversight, much like a PPO but with a higher copayment, is a more sensible model for managed care.

“If you connect the consumer with what the service costs, that consumer will ask, ‘Do I need this service or visit? What are my less-expensive options?’” says Mazer. “They would see what it costs to take care of them.”

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