Another doctor leaving</p>
<p>Denzer closing Kona practice</p>
<p>by Kim Eaton
West Hawaii Today
<a href="mailto:keaton@westhawaiitoday.com">keaton@westhawaiitoday.com</a>
Sunday, September 10, 2006 10:52 AM HST</p>
<p>When Dr. Stephen Denzer entered the medical field, he earned about $70,000 a year. Twenty-three years later, his salary is the same, but the cost of providing care has risen exponentially.</p>
<p>While costs have increased, insurance reimbursements to physicians have not – a primary reason many are packing up and closing down their practices, including Denzer.</p>
<p>After 15 years, the South Kona internist has decided to close his Kealakekua practice, leaving about 2,000 patients without a medical physician.</p>
<p>“It’s impossible to make a living doing primary care,” Denzer said. “If I had my preferences, I would not be closing. I have always wanted to be a primary care doctor in Kona. I never thought I would see this day.”</p>
<p>What is the problem?</p>
<p>According to most area physicians, low reimbursement rates, particularly by Hawaii Medical Service Association, coupled with the lack of specialists and higher costs of living make it difficult to recruit and retain physicians in West Hawaii.</p>
<p>“(West Hawaii) has the lowest reimbursement and highest cost of doing business in North America,” Denzer said. “If you get paid two, three or four times as much to work elsewhere, it’s difficult to stay here. And the cost of starting a business would be impossible. You would really need to be independently wealthy.”</p>
<p>Denzer estimated his office overhead costs to be about $500,000, but that does not include his medical malpractice insurance, license costs, employee salaries and benefits, plus his own compensation, which left much to be desired last year.</p>
<p>Urologist Dr. Jon Lattimer, while not disclosing his annual compensation, said he also has experienced a significant reduction in income since opening his practice 18 years ago, for the same reasons listed above. Although he has not given a final date, he also has decided to close his practice within the year.</p>
<p>“Reimbursements are shrinking, which pinches the profit margin for doctors so they can no longer stay in business. HMSA is the worse, because they are the biggest. They have the most market clout,” Lattimer said. “If compensation was at or above market rates, then physicians could remain in business. HMSA is far below market rates. And by driving doctors out of business, there’s less medical care. Certain (specialty) care is not available to anyone at any price in Kona.”</p>
<p>HMSA’s first and second quarter (from January through June) dues revenues were $893.80 million. Benefit expenses were $813.08 million, and administrative costs were $79.97 million.</p>
<p>At the end of 2005, HMSA had 700,493 members and nearly $556 million in health plan reserves. At the end of June, HMSA’s reserves were up to $592.90 million, with almost 705,000 members.</p>
<p>Health insurance companies pay a percentage of what they determine is a reasonable amount, or an eligible charge. If that amount is lower than the actual charge, the service provider may take a loss or the patient may be responsible for paying the difference.</p>
<p>Preferred providers have agreed to accept the eligible charge and do not charge patients the difference.</p>
<p>“In Kona, with the cost of living, it’s gotten to the point where reimbursement is not keeping up with the pace. There is definitely a loss,” Denzer said.</p>
<p>About 70 percent of his patients are HMSA members. The other 30 percent have Medicare, other insurance or overlapping coverage with HMSA, he said.</p>
<p>Medicare’s low reimbursement rate has become a national standard, and HMSA’s reimbursement rates are lower than that, said Kona Community Hospital Medical Director Dr. Barry Blum.</p>
<p>“Medicare rates were established to be low, but physicians accepted that because we feel a duty to take care of our elderly,” Blum said. “But when a company like HMSA uses the national standard and then comes below that, it’s reprehensible.”</p>
<p>However, HMSA Senior Vice President Cliff Cisco strongly disputed those claims, saying HMSA’s aggregate reimbursement to physicians is greater than Medicare’s.</p>
<p>“You can pick one or two procedures that may be lower than Medicare, but overall, reimbursement is higher,” Cisco said. “Very few physicians are having problems (with HMSA reimbursements). I don’t know why (West Hawaii physicians) are leaving. I can’t speak for their personal reasons.”</p>
<p>But West Hawaii physicians have spoken for themselves. Since 2000, 17 physicians and one physician’s assistant have left private practice in Kona, Denzer said. Some retired, while others moved to the mainland or Oahu.</p>
<p>What is the solution?</p>
<p>In response to the physician shortage, more and more physicians are being employed by KCH or receiving an income guarantee from the hospital. But Denzer and Lattimer agree that is not the answer.</p>
<p>“The salary is greater than what the hospital is being reimbursed by the insurance company for that doctor’s services,” Lattimer said. “But hospitals are subsidizing the doctors’ income in order to attract them.”</p>
<p>While other rural hospitals have created medical clinics to assist with the influx of patients, the affluent will fly to Honolulu for medical care, Lattimer said.</p>
<p>However, they would be footing the transportation costs themselves. It is not a covered benefit in HMSA contracts, Cisco said.</p>
<p>Despite Cisco’s claim that HMSA’s mission is to ensure the availability of adequate care within a reasonable distance of where its members reside, the company’s idea of providing that care is assisting recruitment efforts.</p>
<p>“That’s why we work closely with communities in recruiting. When there’s a shortage of physicians we have recruited either locum tenens or other physicians,” Cisco said. “We are going to do our best to make sure there are physicians in Kona.”</p>
<p>What does the -immediate future hold?</p>
<p>Denzer is not sure where his patients will go for medical care when his office closes by year’s end, but Blum said most will probably visit the emergency room, which will result in higher costs for hospital care.</p>
<p>“There are not enough primary care physicians to cover the population,” Blum said. “Many physicians are not accepting new Medicare patients because they can’t afford to take any more. There are some physicians in the community who are taking patients, but they don’t accept insurance.”</p>
<p>Donald Lewis, KCH chief executive officer, said the hospital’s goal is to work with Denzer so he does not have to close his practice.</p>
<p>“We are doing whatever we can to work with him to keep him in practice,” Lewis said. “If he ends up leaving, it’ll be tough. We’ll be losing a really great physician.”</p>
<p>Lattimer said he was surprised Denzer has lasted as long as he did – and it is only the beginning.</p>
<p>“This is just the tip of the iceberg,” he said. “The community will definitely see more longtime physicians leaving in the future. It’s already happening.”