HMOs Get Mixed Scorecard; NeoTherapeutics Raises $3.5 Million
A few weeks ago, the Business Journal looked at the efforts of Howard Phanstiel, PacifiCare Health Systems Inc.’s president and chief executive, to evolve the Santa Ana company from a straight HMO into a full-service managed care insurer.
During the interview, Phanstiel gave his take on some other issues. One was how the industry is dealing with what’s dubbed “provider pushback”,or hospitals and doctor groups becoming more assertive in their contract demands with HMOs.
Prominent examples include last fall’s decision by St. Joseph Health System, Orange, to whittle its HMO provider network from about a dozen plans down to five. PacifiCare was one of those eliminated in the final cut.
PacifiCare itself has been converting some of its providers to contracts where the insurance risk is shared, rather than those where the hospital or doctors’ group shoulders the complete risk. PacifiCare has found that the more moderate the contract changeover is, “the better we do,” Phanstiel said.
“It works out better for providers because they have more time to understand the new business rules and protocols for doing business with us,” he said.
Moderation works better for PacifiCare because it allows the company to implement appropriate medical management, Phanstiel said. “In the case of California, (last year), we underestimated the pace and volume of conversion. Therefore, our healthcare costs rose at a rate that was higher than expected.”
On the subject of a proposed patients’ bill of rights, Phanstiel said he believes it is likely such legislation would pass this year and he endorses that. He said that PacifiCare allows its members to request a review or extension of benefit services on an expedited basis and obtain independent reviews of coverage decisions they disagree with.
“I think that’s the best approach to solve the problem. I never saw a patient get cured in court,” Phanstiel said.
On the other hand, managed care critics often say HMOs cannot truly be held accountable for their actions if they are shielded from damages stemming from allegations of healthcare delays or denials. But the industry replies that patient protection laws allowing unrestrained liability would cause employers to drop coverage and serve to line the pockets of the plaintiffs’ trial bar.
“Surely, I think, the industry can rally around a patients’ protection act that deals with the fundamental requirement (for) our members to receive proper care that also is practical in terms of administrative implementation and continues to allow managed-care companies to offer quality healthcare at affordable cost,” Phanstiel said.
Down With HMOs,Except Mine
Public hostility toward HMOs has grown in the past few years, according to a new national study from Harris Interactive Inc. But the study also showed that the decline was not based on the personal experiences of health plan members.
Harris asked participants to rate their own health plans based on a scale of A to F. Sixty-nine percent of its respondents gave their plans either an A or B grade, compared with 8% giving their plans a D and 2% giving failing grades. Harris culled its results from a nationwide telephone poll of 1,025 adults, of whom 929 had some form of health insurance, between Dec. 14 and 21 of last year.
On the other hand, 59% of the study’s respondents said that they believed the trend toward more managed care would harm the quality of medical care received, while 29% said it would improve the quality of care. By contrast, 48% of respondents in a 1995 Harris study said more managed care would improve healthcare quality, while 39% said that it would harm quality.
“We believe that these deteriorating public perceptions of managed care are due to fears that are media-driven or physician-driven and not experience-driven,” said Humphrey Taylor, chairman of the Harris Poll, in a release. “Managed care ‘horror stories’ and word-of-mouth reports may also play a role in creating misperceptions among consumers.”
Harris also noted that media coverage of the health insurance industry in the past two years has been “overwhelmingly negative” and added that as long as physicians “continue to bad-mouth managed care (to media and patients), public hostility toward managed care is unlikely to decline.”
Bits and Pieces:
NeoTherapeutics Inc., Irvine, said it raised $3.5 million through an equity placement with Amro International. NeoTherapeutics said the financing would increase its cash reserves in anticipation of upcoming clinical trials in Alzheimer’s disease, Parkinson’s disease and spinal cord injury. Children’s Hospital of Orange County, Orange, opened a “safety house” facility for its new injury prevention program TriZetto Group, Newport Beach, signed an agreement to license its Erisco Facets administration system with MVP Health Plan. MVP serves nearly 500,000 members in New York State and Vermont. Cardiac Science Inc., Irvine, said it received notification from the Food and Drug Administration allowing it to market its Powerheart defibrillator-monitor for applications outside of inpatient hospitals. The notification is intended to allow Powerheart use in outpatient surgery centers, nursing homes and at home when prescribed by a doctor. I-Flow Corp., Lake Forest, said its InfuSystem subsidiary is providing infusion pumps for patients at the University of Texas M.D. Anderson Cancer Center in Houston.
