Health Maintenance Organizations Contracts

Stanford University, one of the nation's wealthiest private universities, is canceling its HMO contract to cut costs and has advised its students with families to consider going on welfare to get health insurance for their dependents. About 250 undergraduates and graduate students must find new coverage for their 400 dependents as of Sept. 1. Stanford is considering new plans and estimates premiums will rise as much as 60% for dependents and 10% for students.

Dealing a blow to FPA Medical Management's efforts to stay financially afloat, PacifiCare Health Systems said Thursday that it has canceled "all but a handful" of its HMO contracts with the physician management firm. PacifiCare's disclosure followed FPA's announcement earlier in the day that it had obtained $25 million in funding from some of its bank creditors. FPA also said the banks agreed to defer any payments under an existing $315-million loan agreement until Dec. 1.

MedPartners Inc., whose California health plan was seized and placed into bankruptcy last month by state regulators, has agreed to pay all of its debts in the state and continue funding its 117 clinics here until they are sold. The deal, which state officials say resolves the issues that triggered the takeover last month, takes steps to ensure that MedPartners' 1.3 million patients in California keep their regular doctors and that physicians and hospitals will be paid.

PacifiCare Health Systems Inc. and a major insurance company in Boston signed a deal that they said Tuesday would save employers money by allowing them to send injured workers to a health maintenance organization for the first time. Liberty Mutual Insurance Group said it believes this is the first time a workers' compensation insurer has teamed with an HMO in this type of arrangement.

With federal health care reform on shaky ground, U.S. employers are taking a harder look at self-help strategies for driving medical costs to rock bottom. They might look to California, where a group of major corporations have demonstrated how to squeeze costs by pooling their purchasing power--without help from government.

Fran and Keith Gochmanosky wanted justice. Their 9-year-old son had undergone surgery to have 70% of his tongue removed because his pediatrician had overlooked a tumor in the boy's mouth. Distraught over the realization that their son would be haunted throughout his life--every time he speaks, interviews for a job or kisses a girl--the Gochmanoskys decided to take the doctor to court.

FHP International Corp. said Wednesday that it will bring to Orange County an option already offered at its other locations: the opportunity for members to use private physicians and hospitals. The Fountain Valley-based health maintenance organization signed contracts with St. Joseph Hospital in Orange and Mission Hospital Regional Medical Center in Mission Viejo, adding a total of 370 private physicians to its repertoire.

FHP Inc. has found a new source of revenue: selling its managerial expertise to other HMOs. The Fountain Valley health maintenance organization has signed a five-year contract with Greater Atlantic Health Services in Philadelphia to help develop, manage and market a new health care program for Medicare patients, said FHP chief executive Bill Price.