Will black doctors win or lose in health reform; threatened by massive changes, black doctors and health care professionals are rethinking their businesses

Black Enterprise, July, 1994 by Marjorie Whigham-Desir

DR. MARCIANA WILKERSON, AN obstetrician-gynecologist in Washington, D.C., enjoys an affluent, well-insured practice with offices on Capitol Hill and in Georgetown. Although not affiliated with a group practice, Wilkerson had a managed care contract with an HMO (health maintenance organization) subsidiary of Capital Care to provide medical care for federal government employees. But when the HMO lost its contract with the government in September 1991, it dropped 250 area physicians, including Wilkerson. In Prince Georges County, Md., 127 of those doctors were black. Wilkerson, who had been with the plan more than four years, lost about 800 plan members--a whopping 30% of her practice.

"The HMO never gave a reason," says Wilkerson. "But when you sign an agreement, there is a clause that says either party can drop the contract without explanation." Luckily, by the end of 1992, she had recovered almost two-thirds of her patients through another insurer.

Similarly, business was good for Consolidated Critical Care Inc. (CCC), a home health care services company head-quartered in Atlanta. After only two years in business, the company had grown from $100,000 in gross sales in 1990 to $1.3 million in 1991 with branch offices around the state. But by the end of 1993, CCC was hemorrhaging. Sales had dropped by 40%.

The company's president and CEO, Richard VanNoy, discovered that although his referral network of doctors and hospitals continued to recommend his service, their patients were not calling. Why? "When we called the insurance companies to talk about reimbursement," explains VanNoy, "they said that [because] we weren't on their list of ancillary care providers, the patient needed to be referred elsewhere. So we lost business." Patients couldn't go outside that list unless they were willing to pay for it out of their own pockets.

Challenged, but not defeated, VanNoy was faced with three options: Sell the business that he'd spent the past three years building; sell 49% of it to a large majority-owned company that could take advantage of CCC's minority status in contract bidding; or fight the insurance companies and demand inclusion into their exclusive managed care networks. He chose the latter. "We had to do something. We saw the handwriting on the wall and to do nothing meant going out of business."

For both Wilkerson and VanNoy, the growing movement to a managed health care system has played havoc with their medical practices and businesses. But they are not alone. The range of black practitioners and enterprises affected cover the health care spectrum, from physicians to home care services. And with the Clinton administration's push for universal coverage, no one will go unscathed.

The handwriting is on the wall. Like professionals and businesses in other industries, if black health care practitioners are to survive and thrive in the 1990s and beyond, they must rethink and restructure their businesses to meet the demands of this emerging system.

To become competitive and fight for their share of the trillion-dollar health care market, African-American providers must: (1) convert their businesses from a fee-for-service base to preventive, routine and/or maintenance care for a set fee; (2) build strategic alliances and group partnerships with other physicians and health care entrepreneurs to increase the size, number of locations and range of specialties of their practices; (3) reduce administrative costs by investing in technology that cuts billing expense and time; and (4) adopt a clearly defined strategy for marketing their services to HMOs and insurers, patients and their employers to get their names on managed care rolls.

Since African-Americans currently make up only a little over 3% of all health care providers, they will become an extinct business in the black community if they dont't make these changes--and quickly.

BREAKING INTO MANAGED CARE

"Black health care providers have not wanted to participate [in managed care], thinking that it will go away, but it hasn't," observes VanNoy. While the desire is now there, getting on the roles of managed care insurers is tough.

To control their increasing health care costs, insurance companies are driving the trend to managed care in two ways. The major insurance companies, which traditionally offered health insurance, now supply policy holders with a screened list or "network" of physicians, health care specialists and service providers that members can choose from for little or no co-payment fee. Most also offer the option of going "out-of-network" for care as long as the member is willing to pay a deductible and a percentage of the cost. In the second option, insurance companies not only insure individuals but serve as health care providers, offering direct and ancillary care, and in some cases, hospital services.

Most of the well-established HMOs and managed care plans have a sizable number of participants--albeit white--with large, multi-disciplined practices. Meanwhile, black providers argue that they are not being accepted--or only on a very limited basis--into these exclusive networks. They contend that racism and discrimination against their often poorer, sicker patient base, which costs more to serve, and the inner-city location of their practices are the primary reasons.