MANAGED CARE: Doctors Group Expands Health Plan
Physicians Care of California "has started an ambitious expansion effort, offering its health insurance plan to small employers across the state to compete against [HMOs] and other insurance middlemen." The Irvine-based group of 1,100 Southern California doctors sees business opportunity rising out of "the widespread discontent over managed care among both consumers and physicians," the Los Angeles Times reports. "We're trying to return medical care to the physicians and the patients," said company founder Dr. Gerald Wilks. He said doctors are fed up with large HMOs controlling health care decisions and dollars. The Times reports that the doctors group is "moving to market its own health insurance throughout the state, selling the plan directly to small companies as well as through brokers."
The Peacock Network
PCOC (pronounced "peacock") plans to "capitalize on what it sees as doctors' frustration with having their requests for procedures reviewed by people at managed care outfits who lack medical training," the Times reports. And, the group promises to pay claims more quickly than large HMOs. In addition, PCOC believes it can sell its health plan for less than larger competitors by keeping its overhead costs down. However, its PPO plan works much like others -- patients have $20 copays when they visit any doctor in the statewide system. But PCOC has a panel of practicing physicians that measure the "quality and costs of care," encouraging doctors within the system to "change their habits if necessary by approaching them in a collegial way."
The Times notes, however, that insurance industry experts believe PCOC "faces serious obstacles in a market" that is "overrun with competition." Noting that PCOC is up against big boys like Kaiser Permanente and Wellpoint Health Networks, Volpe Brown Whelan analyst Ed Keaney said, "It's pretty hard to start up an insurance company from scratch in a mature market like California." Other analysts voiced concerns that doctors often are not good at "managing the costs of care because they are inclined to favor more care over holding down costs." But Jack Lewin, CEO of the California Medical Association, whose California Advantage HMO recently filed for bankruptcy, said PCOC is playing it smarter. He said its approach is better than California Advantage's because PCOC is "starting small instead of ... mounting a multimillion-dollar statewide program at the outset" like the CMA did. PCOC plans to market itself though local medical associations, and says it already has 35,000 doctors who are ready to enter the system. With its 7,000 customers, PCOC says it is making a profit, but knows it must expand, and hopes to add another 13,000 or so members by the end of this year. Thus far, the Times reports, PCOC "has scored both successes and disappointments," gaining 2,000-employee Foster Farms but losing Brea Community Hospital (Marsh, 7/10).