San Francisco Examiner - May 14, 1999
Ulysses Torassa, Examiner Medical Writer

Davies Medical Group, which represents about 100 doctors, will close at the end of the month, its director Kathleen Wayman told stunned San Francisco supervisors at a City Hall hearing on Thursday.

The closure could force Brown & Toland Medical Group to rethink its decision not to admit seven gay and lesbian doctors affiliated with Davies who treat mostly AIDS and HIV patients.

Brown & Toland, San Francisco's largest doctors group with about 2,300 physicians, has said federal antitrust laws place limits on its growth. Ironically, Brown & Toland has been especially wary of undermining Davies, a much smaller group formed around the former Davies Medical Center, which was bought last year by California Pacific Medical Center.

But Tom McAfee, chief medical officer for Brown & Toland, said it may re-evaluate its position now that Davies is closing down.

McAfee spoke at a hearing called by Supervisor Mark Leno, a non-AIDS patient of Dr. Bill Owen, one of the seven Davies doctors.

Owen said he believed that Brown & Toland didn't want to accept him and his six colleagues because they have so many AIDS patients, who require expensive medical care.

McAfee denied that claim, saying the group has a large and sophisticated program for managing HIV.

Financial headaches

Leno and other supervisors said they are worried that the patients' care will suffer if Brown & Toland doesn't accept the seven doctors, noting that they care for 90 percent of Davies' HIV and AIDS patients.

The struggle is taking place against a backdrop of financial distress for many physicians groups. Medical organizations nationwide are feeling a tremendous squeeze from managed-care programs that generally pay them a set amount to take care of patients enrolled in their health plans. As a result, many medical groups have gone out of business.

Brown & Toland, widely regarded as the 800-pound gorilla of physician groups, has contracts with 14 of the largest health maintenance organizations. And even it is having financial problems, requiring a partial bailout late last year from UCSF-Stanford Health Care, where many of its physicians practice. Another local physicians organization, BayCare MedicalGroup, is also experiencing financial woes. It said it recently lost at least two major insurance contracts because of cash-flow problems.

Davies Medical Group said it was only able to negotiate a contract with one insurer, and as a result could not generate enough revenue to stay in business.

Patients, doctors suffer

Insurers have avoided Davies because so many of the doctors' patients have HIV and AIDS and they feared having to pay higher costs, Wayman said. For doctors like Owen, being shut out of Brown & Toland is a huge blow to his livelihood. He said he is already subsidizing his practice to the tune of $10,000 a month.

"Economically, I won't be able to survive," he said.

Wayman said most members of the Davies group are specialists - the type of physicians he said Brown & Toland no longer accepts. She said many members are retiring, moving away or trying to sell their practices.

"They're all frightened," she said.

Antitrust probe

Meanwhile, the Federal Trade Commission last year wrapped up its investigation into whether Brown & Toland was engaging in antitrust practices. Although the commission found no wrongdoing, McAfee said Brown & Toland has remained in contact with the FTC and has been told to keep its growth in check.

"When you really look at the facts and the conditions we were facing, I think you can see we are acting appropriately," McAfee said.

But the supervisors said they remain concerned. They have already approved a resolution asking local members of Congress to investigate whether keeping out the doctors amounts to discrimination based on HIV status.

Leno said after the hearing he felt Brown & Toland was trying to do the right thing, however.

"I think they want to resolve this," he said. "We just have to be creative about this."
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