The Worst Business in America

Johnson is a big man with a gentle demeanor. As he reviews the accounts receivable, he notes the number of unpaid bills for $10. When patients show up without any cash--as they do all too frequently--their copays or visitation fees can go uncollected for months. The front-desk receptionists have now been told not to let anyone see a doctor without paying first--no exceptions--but there are all these uncollected copays still outstanding. Johnson suggests Valley Center consider writing them off, especially if chasing such small sums might alienate a few good patients.

Faust is in a dour mood today. "They're good patients," he huffs. "And they won't pay us $10."

After Johnson packs up and leaves, it turns out Levine has been saving some rare good news: One of their member HMOs may be willing to boost its per-pregnancy payments. Back in February, Levine had heard through Bergen County's obstetrics grapevine that some obstetrical practices had stopped taking patients covered by the HMO (confidentiality agreements prevent Levine from disclosing the name) because its reimbursements were among the lowest in the area. Seeing an opening--hoping the HMO was running low on obstetricians with privileges at Valley Hospital--Levine wrote the HMO a letter, explaining that increased malpractice exposure had caused the practice to re-evaluate its relationship with some of its payers. He indicated that Valley Center would consider quitting without a raise.

Now, after one face-to-face meeting (the first time HMO representatives have ever deigned to sit down with the doctors) the company has come back with an offer--$3,200 per delivery--a $1,000 raise that would give a $50,000 lift to Valley Center's bottom line. The only catch, Levine explains, is that the HMO wants Valley Center to commit to that rate for two years.

The impact around the table is seismic--never before has Valley Center squeezed a raise from a health care insurer. For years the doctors had been helpless victims of a downward drift in reimbursement rates. Now, amid some animated crosstalk, the doctors note with gallows humor that this increase is so large that, as Faust points out, "It's almost what we were making 10 years ago!"

"Can I just be a pain in the neck?" asks Dr. Michele Rooney. She is the contrarian among the partners, a reliable source of uncomfortable questions. "This is a two-year commitment, while other [practices] are dropping out." Why tie themselves to a company, she wonders, that no one else wants to do business with?

"It's a found $50,000," shoots back Roger Coven, the pragmatist who deep-sixed the water coolers. "The others dropped out because they didn't negotiate with them. We negotiated."

By some estimates, one of four Bergen County ob-gyn practices have either quit doing deliveries or closed since the malpractice crisis hit two years ago. Though it's not a popular notion among doctors, there are indications that the crisis is shaking out weaker practices that had been glutting the region with obstetricians and keeping reimbursements low. Assuming Valley Center can find affordable insurance and survive, the crisis may end up lending them new bargaining leverage with their payers.

"We're just lucky we weren't one of the first out the door," says Rooney. "Or they wouldn't have sat down with us."

Levine agrees, and notes that the HMO still pays them poorly for most other medical procedures. "We're still getting killed on hysterectomies," he notes. "They're bad, but they're not terrible."

"Did you hear what you just said?" Rooney demands. "Where else in this practice would we accept that kind of thinking?" Rooney is right, of course, but the room falls silent. No one seriously proposes rejecting the HMO's offer.

Though he has little to report, Levine also broaches the subject of their malpractice situation. There's a rumor, says office manager Diane Roberts, that GE MedPro is under pressure from the state insurance commissioner to take more high-risk specialists.

"Can anyone at the insurance company tell us what is wrong with this practice?" Levine cries out in frustration. "Can't they say, well, there's one person, if he'd stop doing OB, we'd insure you." No, Roberts assures him, the whole group's profile is under consideration. She is a meticulous maternal figure in the office, a woman who has worked for Levine for 11 years and still addresses him as Dr. Levine. "They'll take all or none," she says.

With just more than 90 days to go, no insurer other than Conventus--the carrier that wants the doctors to kick in start-up capital--has made an offer. While other insurance companies won't even take doctors' phone calls, a Conventus representative is willing to come and sit down with Valley Center's partners. And yet, the Conventus policy is particularly distasteful to Monica Meyer, the youngest Valley Center partner and the only one who has never been sued. Conventus demands a five-year commitment from the doctors, and any doctor who tries to leave sooner will be hit with a fee called a "tail," ranging from $190,000 to $300,000. The tail covers any future insurance claims that may crop up in the years to follow (the statute of limitations on obstetrical procedures is 21 years--another reason obstetric rates are so high). The other doctors consider it an academic question, since all are confident they'll be delivering babies in five years. But Meyer, who is expecting her fourth child in November, can envision wanting to leave obstetrics in a few years. To her, the exit fee demanded by Conventus is too high to stomach.

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