A new law in New Hampshire last week lowered the boom on exclusive contractual ties between primary-care physicians and HMOs doing business in that state.
The law immediately barred managed-care organizations from entering or renewing any exclusive agreement in which a physician participating in one HMO is prevented from treating enrollees of competing HMOs.
Existing exclusive contracts have to be phased out by June 30, 1997, except for physicians employed by an HMO whose practices would not have to be opened up to competing managed-care insurers until mid-1999.
Primary targets of the law are 136,000-enrollee Matthew Thornton Health Plan of Bedford and the 127,000-enrollee New Hampshire network of Healthsource, a regional HMO based in Hooksett, N.H.
Primary beneficiaries are the handful of managed-care organizations trying to expand into New Hampshire, including Tufts Associated Health Plans of Waltham Mass.; Oxford Health Plans of Norwalk, Conn.; and U.S. Healthcare of Blue Bell, Pa.
In the meantime, the law protects enrollees caught in the middle of the allegiance-switching game. A measure prevents any HMO from forcing a physician in an exclusive arrangement to end existing relationships with patients covered by a competing HMO.
A physician in that situation will be able to continue seeing other current patients for at least five years from the start of the exclusive contract.
The "exclusivity" issue rose to prominence during an 18-month clash of regulators and competitors over the proposed acquisition of Matthew Thornton Health Plan by Harvard Pilgrim Health Care of Brookline, Mass. (Sept. 25, 1995, p. 38).
Legislative hearings grew out of that debate and resulted in the bill that Gov. Steven Merrill signed into law last week.
Opposition to Matthew Thornton's exclusive arrangement with its affiliated Hitchcock Clinic mounted when Harvard Pilgrim sought to retain that exclusivity as part of its acquisition. Healthsource also was making news by acquiring the exclusive services of primary-care practices in key markets.
Healthsource spokeswoman Tracey Turner said the purpose of the arrangements was not to lock out competition but to provide a higher level of service to HMO enrollees "to differentiate ourselves from other HMOs in the market." The new law "takes away a tool we have had to elevate the standard of care," Turner said.
Among the terms of exclusive contracts were requirements to stay open later in the day or on weekends and to issue reminders to enrollees to undergo mammograms and other preventive measures, she said. That required practices to hire more staff and provide extra services, for which physicians had to be compensated.
Turner also said the arrangements were selective, affecting 40 physicians out of a total base of 500 primary-care physicians under contract. "We were not planning to expand much beyond that number," she said.
But the cumulative effect of Matthew Thornton's and Healthsource's inroads was to keep new players out, said Harris Berman, president and chief executive officer of Tufts, which opened an office in Bedford nearly a year ago.
"We have a staff that's hired and fired up and ready to go, but they've been struggling to put together a provider network," Berman said, adding that when physicians with exclusive ties were separated out, "there were a number of towns and cities where there were just none left."