SAN FRANCISCO: Bay Area IPAs in Financial Crisis
Even as they band together to garner more negotiating clout, San Francisco Bay Area physicians are bleeding red ink from slashed reimbursement rates, as an estimated 50% to 75% of California physician organizations suffer losses, American Medical News reports. Although groups such as San Francisco's prominent Brown & Toland, "developed strong regional reputations," their "clout still doesn't compare with that of the area's large hospital systems and insurers." Dr. David Druker, COO of the Palo Alto Medical Foundation, said, "Our reimbursement rates have been driven down to the point where physician groups in California are in more financial distress than at any time in their history." Compounding the problem, Dr. Ira Davidoff, medical director of Bay Valley Medical Group, said, are health plans that "have no incentive to negotiate that because they've essentially insulated themselves from these losses." Indeed, HMOs have hiked premiums 3% to 6% this year, an increase that has not been passed along to doctors. Even so, for physicians at California Pacific Medical Center and UCSF Stanford Health Care, "membership in the affiliated Brown & Toland Medical Group has become essential." San Francisco internist Dr. Rob Margolin said that for him, Brown & Toland "isn't much different than if it's a fee-for-service patient," perceiving membership in the group as a boon for his practice. "When you talk to doctors in San Francisco and you ask them how they're doing, the big difference is (they) say, 'Are you in Brown & Toland or not?'" Those who have participated in the group have "been relatively protected from the disaster of managed care" in terms of being able to "see patients and do what I want with them, give them good care, and have great access to specialists," Margolin added. But despite Brown & Toland's "widely heralded success," the physician group plunged $4.5 million into the red last year. Without a sufficient reserve, Margolin estimates that the average physician's salary at Brown & Toland will be reduced up to $10,000 to offset the deficit.
"Most of my practices now have no capital reserves," said Dr. Brian Roach, president and CEO of Mills-Peninsula Medical Group. "I'm literally barraged by calls on Friday when we release checks, (with) several offices saying, 'Can I come pick it up because I have payroll this afternoon?" The premium pressures are chipping away at more than physicians' salaries, American Medical News reports, as quality measures have been cut short. "Here at this time when we're about ready to develop these wondrous new mechanisms to improve patient care, we're unable to do it," said California Medical Association CEO Dr. Jack Lewin. "That's the dilemma of the California underfunded health care system," he said (5/17 issue).