UNDER INVESTIGATION. The physician union movement stumbled recently when the U.S. Justice Department charged the Federation of Physicians and Dentists with illegal antitrust activity in Delaware.
The Tallahassee, Fla.-based union had organized nearly all Delaware's 47 orthopedic surgeons and was acting as a go-between in contract negotiations with Blue Cross and Blue Shield of Delaware. Antitrust laws prohibit private practice physicians from collective bargaining, but a union can serve as a go-between, or third-party messenger, linking individual physicians and health plans. The Justice Department complaint, filed last month in U.S. District Court in Wilmington, Del., charges that the union first encouraged doctors to deal with the Blues only through the union and then organized the physicians to terminate their contracts with the health plan.
"The federation organized an illegal boycott designed to insulate doctors' fees from market forces and led the doctors well over the line into anti-competitive behavior," said Assistant Attorney General Joel Klein.
CALL FOR HELP. Add Sheridan Healthcare to the list of physician practice managers retaining outside help to, as the company puts it, "assist in evaluating various opportunities."
But unlike MedPartners and PhyMatrix Corp., which hired Salomon Smith Barney to help them determine what to sell off, Hollywood, Fla.-based Sheridan said Aug. 14 it is investigating ways to finance growth. It has yet to hire an adviser.
Sheridan, a multispecialty PPM with 238 physicians, is one of the few practice managers to trade for more than $10 per share. However, the company, which operates under 53 specialty service contracts at 37 hospitals and 24 office locations, says financial problems among other PPMs have restricted its ability to affiliate with more doctors.
DECISION DUE. The future status of Team Health, a MedPartners subsidiary currently on the block, will be known sometime this month, the unit's president says.
Lynn Massingale, M.D., president of Knoxville, Tenn.-based Team Health, says potential purchasers include buyout groups and physician practice managers. He disputes a report in August's Modern Physician, quoting sources inside Team Health, that a buyout group was the likeliest candidate.
He says the sale of Team Health, which comprises 2,300 emergency and radiology doctors, should be complete by year's end. Birmingham, Ala.-based MedPartners is selling Team Health to raise cash and focus on its PPM unit.
HELPING HAND. At the request of the California Assembly, the state auditor will conduct a far-reaching audit to determine the effect of late payments from HMOs, insurance companies and other payers (including independent practice associations) on physicians.
The audit, which is to be completed by January, will examine existing laws relevant to payment, conduct a survey to determine if physician claims are being paid within the statutorily mandated timelines and then interpret the results of the survey.
California has a statute that requires payers to settle claims within 45 days or pay 10% annual interest. California Medical Association President Robert Reid, M.D., says late payments are common because the Department of Corporations, which oversees all HMOs that operate in the state, is too busy to enforce its own regulations.
MORE BAD NEWS. Just when financially troubled Oxford Health Plans had set a return course to profitability, the Norwalk, Conn.-based company revealed staggering second-quarter losses of $508 million.
The managed-care company attributes $286 million of that loss to charges associated with the implementation of its restructuring plan and other expenses, including $152 million to pay outstanding claims in New York. Oxford expects to incur another $100 million in operating losses for the remainder of the year.
Norman Payson, M.D., the company's chief executive officer, predicts its recently announced restructuring plan (see story on page 56) will allow Oxford to achieve profitability within 12 months. Payson declares the poor earnings report a "line in the sand separating Oxford's past and its future."
STARTING OVER. Harris Methodist Health Plan and Harris Methodist Select are recontracting with all HMO commercial network physicians as a result of the Texas Department of Insurance's concerns about physician compensation.
The recontracting, which will affect approximately 6,000 physicians, focuses on correcting flaws with financial incentives in the original contracts, which, according to the insurance department, were affecting quality of care.
The insurance department worked with Harris on the new contracts, steering it away from trouble spots. And while the new contracts include both economic- and quality-based bonuses, physicians must meet rigorous quality targets before qualifying for economic performance incentives.