CMA Stands by the September 1999 PriceWaterhouse Coopers Report: California Physicians in Fiscal Crisis Due to HMO Underfunding

Statement From Jack Lewin, M.D., CMA Executive Vice President/CEO

Mar 23, 2000, 00:00 ET from California Medical Association

    SAN FRANCISCO, March 23 /PRNewswire/ -- The California Association of
 Health Plans (CAHP) has done a disservice to the citizens of California with
 its latest attempt to obscure the reasons behind the precarious condition of
 our state's health care system. CMA stands behind PriceWaterhouse Coopers'
 (PWC) report, presented last September at CMA's Summit on Physician
 Insolvency, that cites the main causes of the crisis:  below-average premiums,
 and the declining amount of those premiums that for-profit health plans are
 willing to pass on to physicians. On Tuesday, March 21 the CAHP released a
 document that quibbles with PWC's exact numbers while thousands of patients
 experience interruptions and delay in care and hundreds of physician groups go
 bankrupt. This shows just how out of touch with reality CAHP is.
     The fact is that the cost of medical care is climbing again, while
 reimbursement for medical services drops. In its report on the medical group
 insolvency crisis, PWC documented a 35 percent decline in physician
 reimbursement over the past 10-15 years as the cost of living increased by
 25 percent. Nonetheless, CAHP believes ever-tighter cost containment at the
 expense of patient care is still appropriate. Its logic, as found in its
 March 21 document, compares medical care and physicians to producers of
 computer equipment, software, and information systems who lower their per-unit
 prices and still flourish. Incredibly, they ask why physicians can't do that
 too? Most people would answer:  Because people are not widgets, and physicians
 are not assembly-line workers "fixing" patients as they move down a conveyor
 belt. But here we are -- in a society where Starbucks has turned a
 commodity -- coffee -- into a personal experience, and the for-profit HMOs
 have turned ultimate personal experience -- health care -- into a commodity.
     CAHP says today's physician practice insolvency crisis is based on medical
 group mismanagement. Five years ago, when the amount of money physicians
 received for treating patients was more reasonable, most medical groups were
 economically stable. CAHP's president Walter Zelman apparently believes that
 these medical groups that were doing well five years ago somehow suddenly
 became incompetent. CAHP apparently sees no pattern, no cause and effect, in
 the fact that as for-profit HMOs reduced reimbursement rates, the number of
 medical groups in trouble began to rise.
     The data that CAHP criticizes comes from a highly regarded, national,
 independent accounting company. What the data in PWC's report showed was that
 California-style managed care is in crisis. It clearly is. But rather than
 address this crisis by trying to work with physicians the way such
 not-for-profit plans as Kaiser, Lifeguard and Molina are, the CAHP sends up
 this smokescreen. CAHP and the for-profit HMOs are desperate -- afraid of
 potential federal Patients Bill of Rights legislation and state legislation
 that would allow physicians to bargain on equal footing with HMOs over quality
 of patient care issues and reasonable rates. But this latest salvo of theirs
 will only further anger and estrange patients and physicians already fed up
 with the for-profit HMOs mission of putting profits before patients.
     The health plan industry needs to take a serious look at finding a way to
 treat patients and physicians as partners -- not as profit sources or pawns.
 Since the HMO's own organization clearly does not "get it," the company
 invites the individual leaders of each of the for-profit plans to meet with
 CMA leaders. Together we can begin to address the real problem of how to
 adequately finance the delivery of quality health care that all Californians
     The California Medical Association represents more than 34,000 California
 physicians from all regions, modes of practice and medical specialties. CMA is
 dedicated to the health of all Californians.

SOURCE California Medical Association