A group of Evanston, Ill., doctors pulled the plug on HMOs and won't accept patients from the managed-care companies in the new year.
The seven physicians at North Suburban Pediatrics made the decision because HMOs don't reimburse enough, their patients overutilize the care and staff morale has suffered, says James Downey, M.D., a pediatrician with the group.
"From a financial point of view, each time a capitated patient comes through, it costs us money," he says. "We assume (canceling the HMO contracts will) improve our bottom line."
The practice submitted its resignation to its IPA, Evanston Northwestern Medical Group IPA, in October and won't see HMO patients after Jan. 1, Downey says.
Phone calls seeking comment from the IPA and several Illinois HMOs were not returned.
Despite HMO industry claims to the contrary, Downey says that HMO patients overutilize healthcare. For Downey, part of that use is because newborns require many visits. But a larger contributing factor is that HMO patients feel they are entitled to any medical care they want and come to the office for minimal complaints, such as fevers that last only short periods of time, Downey says.
The vast majority of HMO patients previously had fee-for-service plans and haven't changed their expectations regarding freedom to see specialists, he says. Downey says, "They come in much too frequently."
If fee-for-service or PPO patients overutilize health care, at least the insurer pays on a per-visit basis rather than a once-a-month fee, he says.
Although he wouldn't give specific figures, Downey says the amount the practice gets each month per patient doesn't cover the cost of care. HMOs have about 15% of the market in Evanston, and the practice was losing money on HMO patients. If it didn't have PPO or fee-for-service patients, it couldn't survive, Downey says.
The practice receives additional payments for providing routine immunizations, but Downey says the payment doesn't cover the cost of administering the vaccine or the equipment.
"It behooved us to stop," he says.
About 2,000 patients will be affected, and the majority of them want to try to switch insurance so they can continue to see the doctors, Downey says.
HMO patients have created a flood of paperwork, required by their insurers to get referrals, he says. In addition, HMOs require periodic chart review and additional forms that need to be filled out, Downey says. "There's no compensation for that."
Staff morale has suffered because "the office is so darned crowded. Our patient load has increased with patients visiting us as frequently as they do. Some of our staff has decided to leave," Downey says.