Scripps Health confirmed Sept. 26 that its clinic and coastal medical groups — which have been the provider’s most popular options for many patients — will stop participating in Medicare Advantage plans starting Jan. 1, 2024.
The move, which first surfaced publicly in early August, has been estimated to affect about 32,000 San Diego County seniors enrolled in a range of plans from organizations such as SCAN, Anthem, Alignment, MediBlue, Blue Shield, Health Net and United Healthcare.
Rumored for months, Chris Van Gorder, Scripps’ chief executive officer, confirmed the decision Sept. 26. This, the executive said, is not a negotiating tactic.
“Letters are going out today and tomorrow, and they should receive them before the end of the week,” Van Gorder said Sept. 26, confirming that about 32,000 Medicare Advantage members with Scripps coastal and clinic doctors are affected.
Scripps is also affiliated with several physician independent practice associations, such as Scripps Mercy Physicians Medical Group, which will continue to take Medicare Advantage plans. However, Scripps Coastal and Scripps Clinic have traditionally been the most sought after of the organization’s provider networks.
Many are already beginning to look for other options.
Roc Rogers, 70, who said he has had a SCAN plan with a Scripps doctor since 2018, said he has been looking at the cost of supplemental health insurance, which would allow him to switch to original Medicare and retain his doctors and specialists.
Doing so, he said, likely would cost nearly $300 more per month.
“I can’t afford that, and then you have to go through the approval process, and they may not accept you anyway,” Rogers said. “It’s upsetting to me, but what can I do?”
Overall, he said, the care he has received from Scripps was of high enough quality that he wants to stay.
Others are less concerned about staying with Scripps. Dave Averett of Oceanside said his experience as a patient has been less than satisfactory. Getting an appointment for a painful medical condition, he said, has been slow with Scripps. He’s been unable to schedule an appointment until mid-January.
“They had no other doctor I could see, according to the appointment clerk,” Averett said. “It’s very disappointing but not unexpected.”
Van Gorder said making the decision has been painful.
“This is not something that I wanted to do, it’s not something the organization wanted to do, it’s not something the doctors wanted to do, but we also can’t sustain another year losing $75 million on full-risk Medicare Advantage,” Van Gorder said.
By full risk the executive referred to a common financial arrangement between health insurance companies and large medical providers who receive blanket payments for each person they care for whether that care is delivered in a hospital, doctor’s office or skilled nursing facility. The idea is that operating efficiently and acting on illness early provides an opportunity for providers to spend less than they make.
A recent analysis by the health care consultancy Guidehouse published on July 28 indicates that other well-known systems such as Mayo Clinic and Vanderbilt Health have pulled out of Medicare Advantage as margins dwindle.
Scripps has long been known as a premium medical provider throughout San Diego County and generally has operated with healthy margins. But Van Gorder said Sept. 26 that the organization is currently on track to suffer its first operating loss in recent memory due to the same factors — increased labor and supply costs — that have led medical providers throughout the nation to suffer in similar ways.
“The last time we lost money from operations was probably 23, 24 years ago,” Van Gorder said.
In its most recent quarterly financial report to bondholders, Scripps lists a $46 million operating loss for the nine months ended June 30 with total expenses of $3 billion and revenues of $2.9 billion.
Scripps, though, still has cash in the bank, listing $3.4 billion in unrestricted cash and investments compared with $3.3 billion for the same period in 2022.
Many might wonder, then, why Scripps couldn’t simply spend some of its savings and remain in the Medicare Advantage game. But Van Gorder said that the cash must be on the books in order for his organization to borrow the additional billions it needs to repair and replace Scripps Mercy medical campuses in Hillcrest and Chula Vista, and to make other seismic improvements mandated by state law.
Operating at negative margins and slowly eroding savings, he said, is a recipe for reduced ability to borrow in the future, especially since Scripps expects its bond rating to fall because of current financial losses.
“I cannot rebuild Chula Vista, I cannot rebuild San Diego if we continue losing money,” Van Gorder said, referring to Mercy’s twin campuses. “If we continue losing money, I won’t even be able to access the money necessary to do it, so then we end up closing hospitals down, and then there is no care for any of the people in [those] communities.”
Those financial headwinds, though, are not as visible for the thousands of patients who now must begin looking for new doctors during the upcoming Medicare open enrollment period.
Rogers, who lives in the University Town Center area, said he is hoping to find a doctor at UC San Diego Health who can take him. Quoting a popular song from the 1980s band Midnight Oil, he said he can’t help feeling like this is something of a division between haves and have-nots.
“It’s the rich get richer and the poor get the picture,” he said.
Scripps has set up a hotline that patients can call to discuss potential next steps for finding a different doctor at (858) 677-6935, Monday through Friday from 9 a.m. to 5 p.m.