Pioneer EyeCare shifts to more managed care Pikesville company will sell unprofitable physician practices

Health care

November 05, 1998|By M. William Salganik | M. William Salganik,SUN STAFF

Pioneer EyeCare has a new focus.

After completing a shift of top management earlier this week, Pioneer now plans to get out of one of its business lines and expand the other.

The Pikesville-based company hopes to sell the eye-doctor practices it bought over the past few years and will concentrate on getting and managing managed-care contracts, Leon Kaplan, the company's new chairman, said yesterday.

Kaplan was president and chief executive officer until he moved into the chairmanship, replacing Dr. Bert Glaser, Pioneer's founder and chairman, who left in the spring in an acrimonious split.

"What we're really looking at is redirecting the company," Kaplan said. He added that companies that buy and manage physician practices, both locally and nationally, "have seen some staggering reversals."

Also, Kaplan said, Pioneer will look for other specialties in which it can develop managed-care networks. "In three or four years, we'd like to have four or five specialties," he said. As the company moves beyond eye care, it will change its name, but hasn't chosen a new one yet.

Finally, Pioneer plans to expand its eye network -- now about 400 doctors in Maryland, the District of Columbia and Northern Virginia -- to Delaware, New Jersey and Richmond, Va.

Kaplan said Pioneer and other companies buying and managing doctor practices have found it difficult to improve profitability. "People are surprised at how efficiently doctors' offices are run," he observed. "There's not that much more that we can save."

David Smith, who moved up to president and chief executive when Kaplan became chairman, said no company that has bought practices has found the right way to build incentives for the doctors. "The answer is still out there, but I don't think we've found it yet," Smith said.

In most cases, Pioneer hopes to sell the practices back to the doctors. It owns three practices, some with multiple offices, involving 15 doctors, Kaplan said.

Pioneer still contracts for the doctors in its network and prefers getting a flat fee per member from an HMO, in return for providing all eye care. In this market, it currently contracts with Aetna U.S. Healthcare, Cigna and NYLCare, providing eye care for about 750,000 people.

Companies providing care for fixed fees per person (called "capitation") have been faring badly. One, New American Health, part of North Arundel Health System, is closing. Another, Doctors Health of Owings Mills, recently reported $77.5 million in revenue on capitated contracts, but $89.7 million in medical expenses for the fiscal year that ended June 30.

Pub Date: 11/05/98

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