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The Cure for HMOs?

Doctors Seek 'Un-Managed' Client Base


Dr. Thomas LaGrelius turned his back on managed care in the early 1980s.

A manager of a South Bay medical group, LaGrelius said he was deeply disturbed when a Southern California HMO asked doctors to postpone all elective surgeries for patients for four months--an "unethical" move that he contends was driven by financial considerations.

Health-maintenance organizations have changed a lot in the 15 years since that incident occurred, but LaGrelius' opinions of them have not. The 54-year-old Torrance physician has recently organized a group of South Bay doctors who disdain managed care and are swearing off HMO patients.

"We feel this is a very dangerous way to have health care delivered," said LaGrelius, a specialist in geriatric medicine. He and his like-minded colleagues are angry about what they view as HMOs' interference in the way doctors practice medicine and the "unreasonable" fees paid by the organizations.

However, refusing to do business with HMOs is easier said than done. In Southern California, an estimated 90% to 95% of patients who get their insurance through their employers are enrolled in HMOs or other managed-care plans. More than 40% of Medicare beneficiaries in Los Angeles County are enrolled in private HMOs.

So how will these doctors fill their offices?

LaGrelius is counting on three sources of patients: the 5% to 10% of insured patients still enrolled in traditional insurance plans; the "working" uninsured; and members of HMO "point-of-service" plans. The increasingly popular point-of-service plans allows members, for an additional charge, to see doctors not in the network.

"There are a lot of patients with point-of-service who are fed up with managed care," LaGrelius said. "They go out of network to seek care."

It will take a lot of fed-up patients to fuel the success of LaGrelius' group, which calls itself the Independent Doctors Traditional Practice Assn. of the South Bay. The group's 75 doctors have pledged to phase out HMO patients by 2000.

LaGrelius hopes the group will attract patients who prefer the more "traditional" style of medicine, when doctors could make a living "seeing 20 patients a day, not 50" and give them "a lot more personalized, one-on-one attention."

The South Bay group is part of a larger movement of frustrated doctors in New York and several California cities who have formed "independent" associations to fight managed care's influence. In California, several hundred of these physicians are banding together in Orange County, Santa Monica, Sacramento, San Diego and the South Bay.

To attract patients, LaGrelius' group has run advertisements in South Bay newspapers and set up an Internet site ( Besides lists of doctors and a statement of the group's philosophy, the site includes an HMO "Hall of Horrors and Humor."

Not surprisingly, LaGrelius' group is made up largely of veteran doctors. The average age is "about 50," he said. Generally speaking, older doctors have been more resistant to the changes wrought by managed care. Many 50-plus doctors in California began practicing when HMOs were but a blip on the radar screen. In contrast, doctors younger than 40 may have spent their entire careers within the restraints of managed care.

Steve Valentine, a managed-care consultant, says LaGrelius' group is in for "a tough time." One reason is that the patient population it is targeting is not only small, but highly attractive to other medical groups.

And although HMO enrollment has flattened in Southern California, it could rise again as economic conditions change.

With the local economy "pretty good now," Valentine said, many consumers are opting to remain in less restrictive medical plans. "But when the economy takes a downturn, which it eventually will, then HMO enrollment tends to grow as people have less disposable income."

If that happens, the small pond of patients that the "independent" doctors hope to dip into may shrink to a puddle.


David Olmos can be reached by e-mail at or by fax at 213-237-7837.

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