In the most recent display of the dangers of capitation, City of Hope National Medical Center has pulled the plug on its management services organization and written off its
$4 million investment in the for-profit venture.
The Duarte, Calif.-based cancer-care specialty hospital disclosed the demise of its MSO in a bond document and in the notes to its financial statement for the year ended Sept. 30, 1998.
Not-for-profit City of Hope rolled out the MSO in 1995 with the intention of boosting referrals. The MSO provided back-office support to a network of community-based oncologists who were bidding on HMO capitated contracts to provide cancer care. The oncology network eventually controlled contracts covering some 700,000 people yet couldn't turn a profit. It, too, is going out of business.
City of Hope blames "severe revenue constraints imposed by managed-care payers" for undisclosed losses on the contracts. Referrals under those contracts generated 13.5% of net patient revenues in fiscal 1997, or roughly $18 million.
Even if admissions slip as a result of the network's dissolution, 145-bed City of Hope has a way of making ends meet. Through nationwide fund raising, it drummed up enough cash to help push the medical center's total profit above $7 million last year, despite losing $21.1 million from operations, mainly because of its service to indigent patients.
Satisfaction maintenance. It has been estimated that physicians control 80% of how healthcare dollars are spent. Now, it looks as if their behavior influences how patients rate their health plans, as well.
Physicians are crucial to plans' ability to achieve high marks from enrollees, according to a study conducted by the Medstat Group research and consulting firm, based in Ann Arbor, Mich.
It asked enrollees in 20 markets to rank 11 plan performance categories. Of the four deemed most important, three involve doctors: choice of providers; physician care, defined as "listening skills and attentiveness"; and time pressures, defined as "appearance of physicians and staff of being rushed or overworked."
Physician-related categories accounted for almost 50% of a plan's overall rating. "Plans traditionally focus on administration and customer service, but these study findings suggest a larger payoff will result if plans improve the patient-care aspects of their service offerings," says Medstat Senior Vice President Dennis Becker.
Panic in the hills. Those $5,000 signing bonuses and starting pay of up to $20 per hour for experienced nurses being seen in more urbanized states such as California and Texas are now turning up in Montana.
Some clinics and hospitals in the sparsely populated, rural state say it's getting increasingly difficult not only to find nurses, but also to keep them, especially those with a lot of experience or special training.
"I think there's a great nursing shortage, from my perspective, for all types of nurses," says Cathy Kellegher, personnel director at 88-bed Marias Medical Center in Shelby, Mont.
Sami Butler, executive director of the Montana Nurses Association in Helena, says nurses' wages in Montana appear to be about 30% less than those typically offered in the population centers on either coast, which may explain the state's nursing shortage.
Tipping the scales. California may be a hotbed of managed care, but increasing numbers of the state's residents can't manage to eat right, according to a recent study by the California Department of Health Services.
Nearly 29% of California adults are overweight-an increase of 12.7% since a comparable study was conducted in the mid-1980s. Obesity, which is linked to greater risk of developing heart disease, diabetes, osteoarthritis and high blood pressure, is now the second-largest cause of preventable death in the state, after tobacco use.
In response, the California Legislature has dubbed April "Obesity Awareness Month," and groups such as the American Heart Association, American Diabetes Association and the Arthritis Foundation's Northern California Chapter are joining forces on a monthlong educational campaign. Its primary goal is simple: Convince Californians to reduce the fat in their diets.
A profit by any other name. If the Michigan Health and Hospital Association is to be believed, Michigan voters are firmly behind hospitals' efforts to improve their bottom lines.
A new survey of 600 registered voters in the state, conducted by a polling firm in March, found that nearly all respondents believe it is important for not-for-profit hospitals to maintain adequate financial margins, and 62% worry their local hospitals will have to cut staff and services because of financial losses.
But as anyone who has ever delved into the inexact science of polling knows, the devil is often in the details, or the wording of the questions. Here's what the respondents were asked: "How important do you believe it is for the hospital you use to have an adequate financial margin to provide care to those who can't afford to pay, to improve programs and services in the community, and to meet their payroll?"
Outliers could think of another way to word that question. For one thing, the MHHA recently surveyed its members and found that while in 1997 the average Michigan hospital had a negative 1% margin on patient-care operations, they posted an average total margin of 4.8%, including other revenues such as investment income. While nobody thinks that losing money on operations is healthy, neither is poor-mouthing while cashing in fat dividend checks.
