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CalOptima staff gets raises while cutting fees to doctors
September 8th, 2008, 6:00 am · 19 Comments · posted by Jennifer Muir
We told you last week that CalOptima, the county’s $1 billion health care safety net, was cutting pay to doctors by 10 percent to pass along the expense of expected cuts to the state budget and that the agency was paying doctors from its reserves even though they haven’t been reimbursed from the state in months.
CalOptima just sent over more documents that show that while cutting pay to doctors, the agency recently gave one top administrator a 10 percent raise and gave other employees $600,000 in pay raises.
The records also show that CalOptima’s CEO didn’t take any raise at all, and that the agency shaved $1.4 million from what it would have paid for administrative costs if the state budget wasn’t in such trouble.
Disagreement over just how much doctors should be paid during all the budget uncertainty erupted last month at a county Board of Supervisors meeting. At the meeting, Michele Revelle, a lobbyist for the doctor’s group Orange County Medical Association, criticized CalOptima for giving its staff raises and for other administrative spending while paying out less to hospitals and doctors.
The argument reinforces the tough situation for both CalOptima and doctors trying to plan their futures when they don’t know whether the state will slash their funding and they don’t know when lawmakers will figure out a solution.
“In a time that’s so desperate and doctors are barely surviving, they’re cutting costs to doctors and still getting all these things,” Revelle said last month. “If you’re going to make all these cuts to physicians that are dying on the vine, we want to look at what you’re spending on, and we need proof.”
The Watchdog thought her points sounded valid so we asked for that proof too. Read on to find out what they sent.
Cal Optima sent over a list of salaries for its top five administrators for fiscal year 2007-2008. COO Gary Buchert got the biggest raise this year, 10 percent, bringing his salary to $275,000. A spokesman said Buchert took on some new responsibilities this year.
“You’re also dealing with medical doctors here who have an opportunity to go out into the market and have a potential to realize a bigger salary,” said Ben Boyce, vice president of the PR firm Laer Pearce and Associates, who returned calls to CalOptima on Friday. “It’s all part of competing for the best talent, which ultimately benefits the thousands of patients that CalOptima serves.”
CEO Richard Chambers, who earns $312,700 a year, was among the three top administrators that didn’t receive a raise at all. A fourth administrator got a two percent salary increase.
CalOptima also sent over a breakdown of the administrative costs for its 2008-2009 budget. About $600,000 of the agency’s $26,030,504 salary and benefits budget will pay for merit increases. The money for those raises came from a previous budget surplus.
The rest will pay for new employees, who are needed to take on work for a new shared-risk program, and increases to employee health insurance premiums.
Overall, the budget for salaries and benefits increased nearly $1.5 million, or six percent, from $24,536,823.
CalOptima’s board will likely revisit its entire operating budget once the state budget is passed.
“The board’s approach in connection with facing that shortfall was to share the pain of that,” CalOptima spokeswoman Margaret Tatar said. “I can’t underestimate how dire the state situation is. I totally empathize with the providers … ”
Revelle explained just how dire it is for doctors, warning that if the cuts continue, up to 44 percent of the group’s 2,700 local physicians could stop taking new patients enrolled in CalOptima, according to her informal survey of doctors.
September 7th, 2008 at 9:53 am
Since beginning this work a few weeks ago, we have looked at the tax returns of the local hospitals.
The local hospitals are divided into non-profit and for-profit corporations.
The for-profit corporations report their revenue publicly if the corporation has traded securities.
The non-profit corporations report their revenue publicly via their non-profit tax returns.
However, in reviewing the non-profit tax returns of the hospitals, it appears that non-profit hospitals claim revenue in the $250,000,000 to $600,000,000 range per year. Unfortunately, the hospitals do not clearly classify or disclose the amount of money they are getting from government programs.
OC Register needs to have disclosure of the hospital risk pools, how they are financed, which banks are holding those funds, and how much money is moving.
With the insolvency clear in the financial sector, it is obvious that the banks are financially unstable due to the trillion dollars of errors in the handling of the real estate market.
These problems in the banking sector are creating financial instability for government, including local agencies like Cal Optima, the County of Orange, the State of California, and undoubtedly local doctors.
Revelle’s comments suggest that local doctors are going under. I can be a little more clear. The private doctors which flourish in other areas of the nation do not exist in OC.
In assessing the availability of primary care doctors in OC, I have heard from many of my friends and colleagues that they are unable to have continuity of care. The reason in every case was that the doctor was leaving Orange County due to the political problems in the county.
Some of these physicians had large practices, performed sub-specialty care, were surgeons who had special surgical skills, and were choked by Cal Optima’s contracting methodology.
In order to help the OC Register further elucidate where the tax payer money is going, I am suggesting the following:
1. Publish the methodology being used by the county run healthcare system to contract
2. Name the accounts and banks holding funds for the hospital funding…. what are the amounts paid over the past five years or ten years to each hospital… how much did the tax payers get from this appropriation of funds…
3. Name the accounts and banks holding funds for the doctors. Who got paid and when? Where did this money go and who is getting it?
It is interesting that the Cal Optima people are getting less than the executive management team at some local hospitals. OC Register’s work in the last week has been the most open disclosure of these facts in the existance of Cal Optima.
I hope that the staff time wasted on Boy Scouts of America criticism might be redirected to saving our healthcare system and saving the lives of our citizens in the process.
September 7th, 2008 at 10:44 am
One other thing… it’s exceeding difficult for readers to see these headlines.
Can the web editor please put this headline on the front page of ocregister.com instead of burying this story behind 3 clicks and no coverage on the front page?
September 8th, 2008 at 7:55 am
Thank you to the web editor of the OC Register for moving this important story to the front page.
The stuff being published in this blog is really interesting.
When we review the hospital tax returns, it appears that some of these doctors or groups are paid from the hospitals.
In particular, there are medical groups which appear as “independent contractors” on some hospital returns.
So, the question of how a doctor gets paid is really interesting. It appears that some doctors are paid by the hospitals while others are not. What defines this ?
What defines the contracting of doctors with Cal Optima?
When you go to the Cal Optima website, there are only a few groups listed, but OCMA’s Revelle is stating that some doctors will not take more patients. It seems to us in this area that there are no doctors taking any patients in this part of the county.
September 8th, 2008 at 10:40 am
LOL
September 8th, 2008 at 11:19 am
its always entertaining to read the word non profit when describing many organizations that need tax payor funds to function. I think I will turn my operation into a non profit. after all I bet I can find a way to disburse all my revenue and justify the expenses.
September 8th, 2008 at 11:53 am
So is this what John Moorlach was hiding a few weeks ago when he fired a shot across OCMA’s bow and threatened to withhold their funding for filing a public records request into CalOptima’s finances, or does the rabbit hole go deeper?
September 8th, 2008 at 1:39 pm
Why are all you people getting on Moorlach?
As a doctor in OC, I feel that Moorlach should be asking these questions and is doing his job!
The more he asks questions, the more light comes to the situation.
After all, if this is the money which is supposed to care for all the seniors in Leisure World, shouldn’t we know that the funds are secure?
And, here is the crux of the issue… if Cal Optima is being paid, the state IS sending the money.
If Cal Optima is NOT being paid, where is the money being held?
I think the US Congress appropriates the Medi-Care and Medicaid money. The money goes from the federal government to state.
So, is State holding this money?
If so, under what law can the people in Sacramento withhold federal appropriations owed to the districts in this area?
John Campbell, where art thou John Campbell!
September 8th, 2008 at 9:38 pm
It appears that the state IS sending on the money.
So, can someone at County of Orange now please explain what the fuss at Cal Optima is about?
Why is the local agency pushing back against OCMA’s request?
It seems to me that if the doctor is helping me, then wouldn’t I want to make certain that the doctor is actually getting paid to help me?
September 9th, 2008 at 1:35 pm
CalOptima is not receiving any money from the State. They are dipping into a reserve they have saved for these types of instances. It is made from well planning and bank investments that help CalOptima in funding. It is a strong belief at CalOptima to make all payments without receiving funding. All invoices are being paid, and even though it says that a huge amount was paid in raises, it is no more than a cost of living increase for most of CalOptima’s 360 employees.
September 9th, 2008 at 2:49 pm
rpmc4425 - How is it that CalOptima is not receiving money from state?
The reality is that the state is receiving money from the fed.
So, how can the State of California just hold money that is meant for federal programs?
Isn’t that illegal?
September 9th, 2008 at 6:46 pm
Cal Optima’s failure was foreseeable at the time of it’s inception in 1995. It failed to deliver care to the poor, it drove primary care physicians out of Orange County in search of a better place to practice patient centered medicine. Cal Optima is one of many failed managed care systems with an obscene waste of dollars in executive and administrative costs that choke patient care services. Now it is too late….
September 9th, 2008 at 7:11 pm
That is an interesting link. Thank you for publishing it.
I note this line, “while a new state bond issue will make grants available to children’s hospitals across the state (see box below), officials at Children’s Hospital of Orange County are concerned about the ongoing costs of additional beds, given that half of the hospital’s patients are covered by Medi-Cal, on which the hospital loses money.”
The “hospital loses money”?
The executives are paying themselves millions of dollars. So, if the hospital is really losing money, how come their own pay is two times higher than Cal Optima’s upper management?
September 9th, 2008 at 11:09 pm
According to the OSHPD website posted here on this blog…
Average Length of Stay is 6.5 Day(s) in CHOC versus 5.3 days average stay for California. So the CHOC people keep patients in the hospital about 10-15% longer than others.
Average Charge is $77,081 at CHOC vs. $34,392 average for California (OVER DOUBLE THE STATE AVERAGE CHARGE PER HOSPITALIZATION)
Average Charge per Day is $11,925 at CHOC vs. $6,486 average for California
Median Charge per admission is $51,194 at CHOC vs. $45,769 for California