- Del Meyer, MD - https://delmeyer.net -

Doctors Owning an Insurance Company

With all the difficulties that doctors experienced with HMOs, the California Medical Association decided to start their own insurance company. The initial capital was an infusion of $1000 from any doctor who signed up. Thousands of doctors joined for fear of losing patient referrals, and so Cal Advantage was born.

After a year, many of these doctors were still waiting for their first patient under the auspices of Cal Advantage. Instead, they received notice that the newborn insurance company needed an infusion of more capital to grow.

Now, after two years, we’re finding that the baby never left the hospital and is currently in the intensive care unit being resuscitated. Investing doctors never saw any patients and were told that they lost their investment. The doctor-owned insurance company didn’t make it.

But should it ever have been begun in the first place?

The problem with such a venture should have been obvious from the beginning. Managed care is the process of managing patient’s health to conserve costs as efficiently as possible. Financial reality requires that many services not needed or of borderline necessity be denied. How can doctors deny their own requests for sophisticated and expensive tests? The conflict of interest between good medicine and restrictive policy should have been apparent and the entire proposition should have been cancelled.

Doctors need to again assume the role of being the patient’s medical advisor, managing the patient’s health in the most efficient manner and not be party to any financial gain based on the extent of the evaluation. But physicians should not have to limit their patient care by being involved with the insurance business.

These messages were written in the years as noted and may be somewhat dated at this time. Please consult your physician or other health care provider.