DMHC’s Takeover of Lifeguard Not Expected To ‘Immediately’ Impact Patients
The state takeover of San Jose-based Lifeguard will not cause any "immediate problems" for the not-for-profit HMO's 168,000 patients, the San Jose Mercury News reports (Sevrens Lyons, San Jose Mercury News, 9/17). The Department of Managed Health Care on Friday assigned a conservator to assume control of Lifeguard because it has failed to meet state solvency requirements. The HMO's financial reserves fell below the state's requirement of $17 million to $18 million, according to DMHC spokesperson Steven Fisher. The HMO also has liabilities of more than twice its assets, causing concerns about its ability to pay creditors (California Healthline, 9/16). In a statement on the company's Web site, Lifeguard said the state takeover will not "change the ability [of patients] to get the health care [they] need." The Mercury News reports that analysts and state officials are "mourn[ing]" Lifeguard's problems, calling the situation a "textbook example" of the impact of economic pressures on the state's health plans. Fisher said, "With all the complaints around HMOs, it's always disappointing to see an HMO with high [quality] rankings have these types of problems." Lifeguard received high ratings compared with other HMOs in Northern California in terms of quality of care and consumer satisfaction. However, analysts said some of Lifeguard's "unique" qualities made the HMO a "financial liability." Lifeguard's "modest size" made it difficult for the company to negotiate low prices for provider services and absorb loses, Walter Zelman, president of the California Association of Health Plans, said. "If you misjudge costs a little bit or if you lose a few employers, you can find yourself in a much more serious position than a bigger plan would," he added (San Jose Mercury News, 9/17).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.