UCSF Group Switches Allegiance from B&T to Hill IPA

(MoneyWatch)  The byzantine mess of California's interlocking medical groups and IPAs took a new turn as the University of California San Francisco (UCSF) Medical Group prepared to switch its affiliation from the city's Brown & Toland IPA to San Ramon, CA-based Hill Physicians. Aside from giving the latter IPA an enlarged foothold in San Francisco, the deal also raises questions about how "accountable care organizations" would function in a real market environment.

The new relationship between 1,500-physician UCSF and 2,600-physician Hill Physicians will take effect at the end of the year, after UCSF's current agreement with Brown & Toland expires. The group and the IPA are likely to strike another deal allowing HMO members with a Brown & Toland primary-care doctor to retain access to the specialists at UCSF, the leading academic medical center in the Bay Area. But that access will probably be subject to preauthorization and administrative review by Brown & Toland, according to UCSF and Hill. In essence, it will be an "out of network" relationship.

The new arrangement between UCSF and Hill will give that IPA's HMO members access to UCSF specialists with a referral from a primary-care physician. Among them are enrollees in Aetna, Anthem Blue Cross, Blue Shield of California, Cigna, Health Net, and UnitedHealth/Pacificare. Because many UCSF faculty physicians teach and do research but don't see patients, the deal with Hill adds only 520 physicians to the IPA's total. Including the 20,000 new HMO members cared for by those doctors, Hill Physicians will now deliver care to about 320,000 people in northern California.

It's not clear exactly why Brown & Toland and UCSF are breaking up. But whatever the reason is--and these things usually involve money--the switchover illustrates why the managed care structure as it has evolved in California is not a good model for the rest of the country. The main problem is that the "delegated risk model" used in the Golden State adds an extra layer of competition to the competition that already exists among health plans. Not only does this add administrative costs, but it also creates unnecessary problems for physicians and patients that have nothing to do with health care.

Here's where this business deal intersects with the national reform debate: Some leading health policy experts advocate government incentives to form integrated delivery systems known as "accountable care organizations." These could be hospital-based organizations or IPAs or multispecialty groups that would be associated with a hospital. The idea is that these ACOs could lower costs, increase quality, and reduce waste by getting providers to work together.

I like the idea of organizing providers into larger care delivery units, because the fragmentation of our system is one of the main obstacles to real reform. But if the current insurance companies remain in charge, I fear that ACOs would only increase the complexity of the system without eliminating the competitive aspects that do not increase the value of care. Instead of adding another layer to healthcare financing, competition among provider organizations should replace competition among insurance companies.