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Profit Motive in Health Proposal?

February 14, 1986

As president of the West San Fernando Valley District of the Los Angeles County Medical Assn., I would like to set the record straight with respect to allegations made at the Jan. 14 public hearing for the state's Expanded Choice pilot in the San Fernando Valley ("Doctor Questions List of Peers Signed Up for Medi-Cal Pilot Project," by Lynn O'Shaughnessy).

This project, you will recall, proposes to delegate the medical care of 87,000 elderly, poor and disabled individuals to what is a wholly inadequate and fiscally unjustified "test" program, in the opinion of a broad-based coalition comprised of beneficiaries and their advocates, health care providers (including physicians), most state legislators in the Valley, and the mayor.

In this program the provision of health care will be the responsibility of seven health maintenance organizations. Although the HMOs which have thus far been selected are very reputable, they have, to date, provided no convincing evidence that they have the medical, geographic or administrative capability of providing care for 87,000 relatively immobile individuals dispersed throughout the San Fernando Valley.

At the Jan. 14 meeting, it was asserted that LACMA's opposition to this program was based entirely upon financial self-interest, because physicians in private practice would no longer be able to see these patients and, therefore, would lose fee-for-service income. In fact, the administrators of the pilot project have repeatedly attempted to assure us that this would not be the case. We have been told that all physicians wishing to participate in the program are free to do so and, therefore, can continue to see their patients through an administrative relationship with the HMOs. Since these physicians will continue to be compensated for their services in this setting, the allegation makes no sense.

It is, of course, an attempt to divert attention from our real concerns, and those of the entire coalition, namely that the pilot project will significantly reduce access to medical care and quality of medical care for those most in need. Indeed, as pointed out in a report by a state legislative analyst, this program will require major additional expenditures of state funds, rather than provide savings as proposed by the commission.

Perhaps there is another question to be asked about the basic motives for participation in the pilot program. Why are the health maintenance organizations so anxious to participate in this project? The answer may be simple. Each health maintenance organization will be paid an average of $100 a month per program-covered beneficiary, by the state of California. This money will be paid starting with the first month of the program's existence and will be paid each month, regardless of whether or not the beneficiary receives services from the health maintenance organization. Some of the health maintenance organizations have proposed to provide services for up to 30,000 beneficiaries. If a plan did in fact enroll 20,000 beneficiaries, it would receive an average of $2 million per month, starting on the first month of the program's existence. To some, this might appear as a fiscal windfall.



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