Striking a blow for physician control of managed care, Pennsylvania Physicians Care last week obtained a state insurance license to market a PPO in 16 Pennsylvania counties.
Other doctors, though, simply want to learn how to work better in a managed-care system (See story, below).
Started in 1994 by 18 practicing doctors, PPC said its PPO launch is but the first step toward a statewide HMO that would be exclusively owned and controlled by doctors in the state.
A board of 25 physicians directs the plan, and doctors will ultimately control utilization and treatment policies of the PPO, company officials said.
"Our goal is market share, so doctors can have a voice in healthcare," said Richard A. Felice, the company's president and chief executive officer. "The doctors who formed it believe managed care has taken them out of the decision tree, and this is their response."
More than three years in the making, Harrisburg, Pa.-based PPC raised $22 million from more than 4,000 doctors at a price of $5,000 per share. Ownership is limited to licensed physicians, podiatrists and oral surgeons practicing and living in Pennsylvania.
Over the next few months, the group will begin selling its PPO in 16 contiguous counties that cut a swath from the south-central to the northeastern part of Pa., just west of Philadelphia.
Significantly, the company has obtained a risk-bearing license for its PPO and is seeking the same for its HMO, expected to be approved by summer. PPC has set aside about $5 million in reserves as a condition of bearing insurance risk. While managing risk has perplexed even sophisticated and aggressive for-profit plans, this physician-owned company believes it has hired a team that can handle the challenge.
The plan now has a staff of 18, up from three last September. And top management has an average of more than 10 years' experience in managed care, Felice said.
"We have a lot of experience in running the back room of an HMO, and we're marrying that to the noble mission of patient care," said Felice, who was previously president of Doctors Health Plan, Durham, N.C.
But the doctors could be forced by the crushing competition for healthcare insurance in Pennsylvania to emulate the very plans they are trying to supplant.
"They'll have to take on every characteristic of a risk manager to be competitive or profitable or both," warned William B. Hanna, president of Pilot Group, a Pittsburgh-based healthcare consulting firm.
Their honorable intentions notwithstanding, the doctors' managed-care plans will lose money or fail to gain customers if they don't effectively control utilization and costs, Hanna said.
While acknowledging the challenge of providing high-quality care at a reasonable price, company Chairman Gary Brown, M.D., said: "We have always believed the people best able to achieve that balance are the physicians themselves, and now we're prepared to enter the market and prove it."
The Pennsylvania Medical Society helped PPC get off the ground with a $500,000 loan. But that seed capital was quickly repaid once long-term investors were found, Felice said, and the state medical society maintains no equity interest in the company.