Stanford’s HMO Pullout May Overwhelm Area Providers
Stanford University Medical Center's announcement in May that it will not renew its six HMO contracts at the end of the year has raised concerns that area providers will be unable to handle the 50,000 patients who could be affected by the move, the San Francisco Business Times reports. Saying that "it no longer wanted to be in the capitation business," Stanford announced that it will let its HMO contracts with Aetna, Health Net, Blue Cross of California, Blue Shield of California, Cigna and PacifiCare lapse at the end of the year, and it will only "negotiate with the plans for a transition of patients before the year's end." Some health plan officials say that Stanford may be looking to renegotiate their contracts for higher capitation payments, but the medical center has said that "its exit from the HMO business is final," the Business Times reports. All of the plans except Aetna missed Stanford's "informal" June 30 deadline for establishing their transition plans, "highlight[ing]" the difficulty that the insurers and patients may have in finding a new provider. "We do not have the capacity to take on thousands of patients," Dr. David Druker, CEO of the Palo Alto Medical Foundation, which already has turned patients away, said. And officials at El Camino Hospital say that any "significant additions of patients" could lead to a three-week wait for an appointment. Due to the lack of providers, many patients could have to "travel up the Peninsula or across the Bay" to see their new doctor. "There aren't many alternatives near Palo Alto," Glenn Smith of Watson Wyatt Worldwide said.
According to the Business Times, Stanford is giving patients the option of switching to a PPO plan so that they can continue to see their current doctors. But many employers do not provide a PPO option, leaving "many observers" to predict that a "significant number of patients" will leave Stanford. Michael Chee, a spokesperson for Blue Cross, said, "Regardless of the outcome of negotiations, there are no guarantees as to what the members will choose to do. We're all a bit confused by what Stanford is trying to accomplish. They're jeopardizing their monthly capitation revenue." The Business Times reports that HMO capitation payments produce about $10 million in revenue for the medical center. Stanford officials "believe that they are the first university-affiliated medical group to reject capitation plans" (Doherty, San Francisco Business Times, 7/9).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.