Waiting Patiently

Most medical industry watchers didn’t like the odds when the California Medical Assn. announced plans in 1994 to form a doctor-run health plan to compete with the state’s managed-care leviathans.

The doctors viewed it as a last-ditch attempt to preserve physician control over patient care--and the health-care dollar.

But skeptics said the CMA venture couldn’t possibly hope to compete with large, deep-pocketed health plans with years of experience and millions of members. And, they asked, would doctors be able to manage themselves any more cost-effectively than they had in the days of old-fashioned traditional insurance, when costs spiraled out of control?

More than two years later, those questions are still largely unanswered. Yet, while similar doctor ventures around the country have fizzled, the CMA venture, called California Advantage, perseveres.

California Advantage, which operates several types of managed-care plans, has attracted 5,300 members through the state’s health-care purchasing alliance for small employers, says John Gray, the former Orange County health executive who is heading the CMA venture.

California Advantage operates three of 23 health plans offered through the Health Insurance Plan of California, competing for members against giant insurers such as Kaiser Permanente and Blue Shield of California.

This month, California Advantage got state approval to market its health plans to employers with 50 or more workers. Because the company operates only in California, it is targeting employers who operate entirely within the state, such as government agencies, school districts, public utilities and certain banks, Gray said.

Still, California Advantage, with fewer than 6,000 members, is a long way from what Gray calls the “critical mass” of 34,000 members that it needs to be financially viable. Some experts think that figure is closer to 100,000 members.

Since January 1995, California Advantage has attracted more investors than members--nearly 7,500 doctors from across the state have invested $1,250 each in the venture, Gray said. The group hopes to have 10,000 doctors signed up by the end of 1997 and to have 25,000 physician investors within five years.

The CMA effort is similar in strategy to moves by doctors in other states to recapture more control over their profession. While some of those efforts recently have collapsed, doctors around the country will be closely watching what happens in California--a bellwether for innovation in managed care.

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Complaint-Line Complaining: Health insurance executives are doing a lot of off-the-record grumbling this week after California Corporations Commissioner Keith Bishop slapped 43 health plans with fines of up to $40,000 for noncompliance with a state law that requires them to inform members about the agency’s toll-free telephone hotline for consumer complaints.

Several plan officials called to complain that the agency’s action was hasty, unwarranted and, perhaps, politically motivated. They noted that the corporations agency has been under fire from the news media and some legislators for failing to adequately protect consumers. There are legislative efforts in Sacramento to strip the agency of its oversight responsibilities over HMOs and assign those duties to another agency.

But one Senate staffer says the HMOs’ criticism is mostly “spin control” aimed to deflect attention from the fact that the health plans were caught violating state laws they had publicly endorsed.

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David Olmos can be reached via e-mail at [email protected] or by fax at (213) 237-7837.