As the debate on health care reform continues to take center stage across the country, some very real effects of the 2010 Affordable Care Act have already reached California and the Lake Tahoe Basin.
Barton Health's failure to renegotiate the contracts with the two obstetrician and gynecological physician groups has roots in the act, aka Obamacare. The hospital, which expects large cuts in reimbursements during the upcoming years, has been forced to make some changes to streamline their system, Barton's Director of Public Relations and Marketing Monica Sciuto said.
Contract negotiations with the groups fell through after Barton decided to stop managing the Tahoe Women's Care and Emerald Bay Center for Women's Health offices in South Lake Tahoe and Minden, Nev. According to a statement from Chief Medical Officer Dr. Clint Purvance, both practices were losing a significant amount of money - the hospital could not provide the exact amount because of privacy issues - and they were asked to consolidate physicians and services.
According to Dr. Kelly Shanahan, the obstetrician and gynecologist with the Emerald Bay Center for Women's Health who worked directly on the contract proposals, the doctors were never told the exact amount they needed to cut, but they'd heard the number ranged from $500,000 to $700,000.
Shanahan said the physicians agreed to combine offices in Tahoe and Minden and they laid off one doctor. She said she estimated those savings would cover the practices' losses.
The physician groups' original proposal asked for a base compensation amount in addition to continued management of one Tahoe office, one Minden office and the Barton obstetrician clinic, according to Shanahan.
That compensation amount - which neither Barton nor the physicians specified - was considerably higher than the current compensation structure, Purvance wrote, and Barton responded with two counter offers: the groups could become an outpatient department or they could accept a daily amount to cover the obstetrician clinic. Management of the practices was not mentioned in the second proposal, Shanahan wrote in an email.
"(There was) no base compensation just payment based on productivity, pay for providing coverage of the Barton clinic obstetrical patients at a rate that was half of what Dr Kobalter and I were paid 20 years ago when we were moonlighting as residents, and only payment for roughly half of our malpractice expenses," Shanahan said of the first option.
The physician groups responded by calling for a meeting with Barton's senior administration. Barton replied with their final proposal: there would be a set amount of obstetrician services and no management of the practices, according to Shanahan.
That final model mirrored the one currently used by the Tahoe Carson Valley Medical Group, Scuito said. The physicians could contract with the hospital individually, but the hospital would no longer manage the private practices.
"It was a new business model that would change things up, and the physicians would go back to an independent model. That was rejected," Scuito said.
The hospital has successfully renewed 63 physician contracts this year, Scuito said, and even though health care reform is prompting some changes, it doesn't mean that practice management isn't viable.
By Jan. 1, 2014, those changes will become more drastic when those health care reforms go live. Businesses will have the option to to move from private insurance to government-run packages, or exchanges. And the money coming from the exchanges will be less than what the private insurers paid. The rates still have not been set, but Scuito said Barton anticipates losses in the millions.
"As part of Affordable Care Act, one of the ways the expanded coverage is going to be paid for is by cuts to the medical provider," California Hospital Association spokeswoman Jan Emerson-Shea said.
From 2014 until 2020, Emerson-Shea said California hospitals stand to lose $17 billion in reimbursements. This comes on top of the fact that the hospitals are already underpaid for their Medicaid and Medical coverage, she said.
While the hospital waits for the rates to come out, Tahoe and Carson Valley jobs and businesses hang in the balance. Between the two practices, there are 20 employees other than the physicians, some of whom might not have a job come Dec. 31 when the contracts expire. None of the employees were available for comment, but Scuito said some of them can continue to work with the new obstetricians and gynecologists or they will have the option to apply for another position within the hospital.
If the current physicians decide to set up an independent private practice in Tahoe, that might also offer them an opportunity, Scuito said.
And though Shanahan said she doesn't want to leave the basin, she'll have to take a significant pay cut to operate her own private practice without Barton management.
"I am fighting for my future and for my patients. I have poured my heart and soul into my practice. I do not want to subject my neighbors, my friends, my community to less than stellar care. The current doctors want to continue to provide the quality care we have provided for a cumulative 80 years," Shanahan wrote in an email.