The formation of a specialty "carve-out" network in Texas has pitted a physician group against an HMO that is one of its biggest payers.
Houston's Kelsey-Seybold Clinic, a nationally respected multispecialty group practice, is at the center of the newest battle for healthcare dollars: large multispecialty physician groups versus single-specialty networks, or specialty carve-outs.
As a result of the dispute, Kelsey-Seybold has terminated its HMO contract with United Healthcare of Texas (a contract that offered the group 4,000 covered lives). The conflict was sparked by the formation of a gastroenterology network by United, the Texas Alliance for Digestive Disease (TADD), and its requirement that United enrollees use it.
Kelsey-Seybold Clinic Chairman J. Michael Condit, M.D., says the carve-out is in conflict with his group's mission and, rather than force the handful of affected gastroenterologists to participate in TADD, the group chose to terminate its entire HMO contract.
"Kelsey is not in the business of walking away from work," he says. "We want as many patients as we can get. But we have to ask ourselves whether (the contract) fits with our mission."
Specialty carve-outs, Condit says, are a way for health plans to "divide and conquer until individual doctors have no clout."
"Give us a total capitated contract and we will manage all this risk, we will provide the care. (With carve-outs) you're going to add overhead and another layer of administration, but it's not clear who's going to manage all that risk."
Single-specialty networks -- relatively new players on the healthcare scene -- are growing in popularity with both providers and health plans (see March, 1998, page 28). Providing care across a continuum and caring for chronic illnesses can be very costly; carve-outs allow providers to manage the business and clinical aspects of just one disease (not many). If all goes as planned, they become more efficient by shifting treatment to outpatient settings and developing standardized treatment protocols.
United Healthcare of Texas plans on organizing similar networks for cardiology and orthopedics later this year with the hope of cutting costs by 15% to 20%, according to CEO Paul Cooper. Health plans and physician practice management companies (including such specialty-specific PPMs as Accountability Oncology Associates) often are behind the organization of single-specialty networks because of potential savings, says Stuart Friedman, director of the Tiber Group, a Chicago-based healthcare management consulting firm.
"When payers contract with a large multispecialty group for global capitation, they delegate the medical management part of the business," he says. "Wall Street has sent a message that says the key companies in healthcare are those that best manage medicine. If managed-care organizations are getting into global capitation, they're not really in the medical management business.
Single-specialty networks give the payer a greater opportunity to play a role in medical management"
United's Cooper predicts that the group practice versus single-specialty network battle will continue to be waged as physicians continue to merge and consolidate into larger groups. "I think we will have these two schools of organizations that will clash as we go forward," he says. "Some physicians will choose to align themselves with single-specialty organizations, some will choose to align themselves with multispecialty groups."