In San Antonio, Texas, fierce independence is ingrained in the heritage of physicians and hospitals.
After all, the city is home to the Alamo, a monument to a battle for liberty that draws 3 million visitors a year.
Ironically, both the Alamo and healthcare are now subjects of local controversy.
The Alamo debate, carried on in the columns of the San Antonio News-Express, centers on control of the historic monument and whether it carries with it the baggage of racism in a city where 55% of the 1.2 million residents are of Hispanic descent.
The healthcare debate is over partnerships.
In recent years, San Antonio's private hospital market has been dominated by three large systems-the four-hospital Baptist Memorial Hospital System, six-hospital Santa Rosa Health Care Corp. and Southwest Texas Methodist Hospital. Four other hospitals, recharged by the ownership change to Columbia/HCA Healthcare Corp. last September, now are expected to be a major market force as well.
What's more, the old competitive barriers are crumbling. For example, last week Baptist and St. Luke's Lutheran Hospital announced they would merge. Affiliation discussions also are under way at Santa Rosa and Methodist, which already have merged their pediatric services. Baptist also has been talking to University Health System, formerly called Bexar County Hospital District, the financially strong county hospital. University, which earned $12 million in 1992, recently agreed to operate an air ambulance system with Baptist. Observers believe that effort, sparked by fundamental marketwide changes, may lead to other ties.
In addition, Santa Rosa executives are talking to University and Baptist about launching a Medicaid HMO to ensure they don't lose that business when Texas redesigns its Medicaid payment system. The state expects to launch a pilot project in San Antonio is 1995.
"We're in the midst of an economic revolution in healthcare," said Robert J. Nolan, president and chief executive officer of Santa Rosa. A Harvard-educated former assistant U.S. attorney who prosecuted Medicare fraud cases in Pennsylvania, Mr. Nolan joined Santa Rosa last April. In September, he laid off 35% of the senior managers and 214 employees, 7% of the system's work force, achieving an annual $6 million savings.
Unique PHO. Mr. Nolan is in the process of forming a physician-hospital organization that he claims is like no other in the area. He went to the hospital's primary-care physicians and told them he would design it any way they wanted. Once the primary-care physicians commit, specialists will be invited in, but they will never outnumber the primary-care doctors, he said.
"Our strategy is to be able to garner and effectively manage large-volume capitated contracts," Mr. Nolan said.
Just a few years ago, those would have been fighting words to San Antonio physicians. After all, this is the city that spawned Physicians Who Care, a group noted for its attacks on HMOs, utilization reviewers and for-profit hospitals in the mid-1980s.
The most vitriolic rhetoric was aimed at Humana, whose two-pronged strategy of operating hospitals and insurance plans hit a brick wall in the Alamo City. The company's San Antonio experience played a big part in the decision to spin off its hospitals business, which became Galen Health Care and then was purchased by what is now Columbia/HCA Healthcare Corp.
Now, "they need more orthopedic surgeons around here to treat the doctors scrambling to sign (managed-care) contracts," said Brant Mittler, M.D., with tongue in cheek. The outspoken cardiologist and former Bexar County Medical Society president helped found Physicians Who Care, which has 3,500 members spread throughout the United States.
Running scared. Today, Dr. Mittler likens San Antonio's physicians as "a herd of antelope chased by lions. They're scared."
More than one-third of the city's 3,000 physicians have signed up to be providers for the remaining Humana health plan's 110,000 San Antonio enrollees.
Physicians "looked up and realized this wasn't going away," said Jon Wampler, president and chief executive officer of PacifiCare of Texas, which has more than 90,000 enrollees. Providers seem to be following their patients. PacifiCare's Medicare risk HMO has 26,000 enrollees.
"We can't really learn to crawl, we have to start out in a jog (on managed care) because of health reform," said William Rasco, president of the 38-member Greater San Antonio Hospital Council. Mr. Rasco was hired in late 1993 to head the newly formed council and is seasoned in getting providers to overcome the mentality of "this is the way we've always done things."
A retired U.S. Air Force colonel, Mr. Rasco formerly headed the Joint Military Medical Command in San Antonio, which brought six formerly independent military hospitals and clinics under one director. While the move was "not politically popular," he recalled, it shaved money and military bureaucracy.
Part of what makes the city unique is its large military healthcare system -three hospitals serving a military population of 85,000. Two of the nation's three military trauma centers are in San Antonio, and those centers also handle civilian cases.
Military plays role. The military itself may inject an additional dose of managed care with its new Tricare Southwest Health Plan. Under the plan, military personnel, retirees, civilians employed by the Department of Defense and dependents will receive healthcare through one insurer serving 15 cities in Arkansas, Louisiana, Oklahoma and Texas. The contract has not yet been awarded but will be administered out of San Antonio.
Another major payer, the state Medicaid program, also is going into managed care. That's important for Santa Rosa, where Medicaid accounts for as much as 73% of its patients at Santa Rosa Children's Hospital and 34% of the adult patients at its other facilities. In Bexar County, nearly one in four residents lives below the poverty line -compared with 15% nationwide.
A heavy beneficiary of Medicaid disproportionate-share money, Santa Rosa received $20 million in 1993 and will receive $13.5 million this year. However, with the state moving to managed care, Santa Rosa hopes to form its own Medicaid HMO by next year. "It's in our and University's interests not to have someone else dictate where those patients go," Mr. Nolan said.
That someone else conceivably could be the biggest wild card in healthcare today: Louisville, Ky.-based Columbia/HCA, the chain of 197 hospitals that prides itself in physician-equity partnerships. Its efforts in San Antonio could begin a process in which physicians begin taking sides.
Many of the city's 3,000 physicians practice at more than one hospital, their admissions based more on geography than hospital loyalty. Physicians on the south side of town practice at hospitals there; those to the north practice primarily in the Southwest Texas Medical Center, a development of seven acute-care hospitals within walking distance of each other.
Columbia's test. Columbia/HCA owns the former Humana hospitals on both sides of town, and the syndication could be a referendum of sorts in physicians' faith in Columbia/HCA. The four former Humana hospitals lost some $40 million in the San Antonio market in 1992 because of much-publicized problems stemming primarily from the Humana health plan's treatment of physicians. Columbia took over the former Humana hospitals when it merged with Galen last September. Since then, Columbia/HCA has brought in Gary Looper, the head of its Corpus Christi, Texas, system, to manage the San Antonio market.
One of his top priorities is to make San Antonio a profitable market for Columbia/HCA. The turnaround is already under way; in January, admissions were up 15% over the previous year at Columbia/HCA hospitals in San Antonio.
Columbia/HCA will spend $25 million on capital improvements at its San Antonio hospitals this year. "We're showing our commitment to be in this market for the long-term," Mr. Looper said.
To cement physician loyalties, Columbia/HCA will offer them equity in the business, much as the company has done in Florida and other Texas markets. A presentation will be made this month to the more than 800 physicians who practice at Columbia/HCA hospitals.
"I can easily see this market consolidating into two or three delivery systems in the next five years," Mr. Looper said. "That would almost necessitate that we and the other providers find good healthy ways to come together."
The most likely affiliation prospect is Medical Care America, with which Columbia/HCA already has a national agreement. Medical Care operates a freestanding surgery center and a separate surgery center/recovery center, which is about to expand. The recovery center, located at Huebner Medical Center, is unlike most hospitals that start with inpatient services and then add outpatient services.
Huebner, developed by the Birmingham, Ala.-based healthcare facility management firm of Starr Sanders Johnson, started as an outpatient project for HealthSouth Rehabilitation Corp. and Medical Care America. Now it's adding more inpatient services.
A $9 million expansion of the facility-built for $10 million in 1991-will add 40 beds for Medical Care's part of the project and a sports institute by Birmingham, Ala.-based HealthSouth.