M.D.s and D.O.s Today

Mr. Allen Korneff interviewed by Dr. Michael Seffinger, DO

in Downey California
May 8th 2007

Dr. Seffinger: Thank you for agreeing to interview for this project. If you could please start out by telling us who you are and where you were born, raised and educated and trained and how you got involved with the Osteopathic profession and your career.
Mr. Korneff: I was born in Los Angeles in 1941, September 17th, lived most of my younger years in East Los Angeles in Boyle Heights and City Terrace where I went to grammar school and junior high school, and later moved to Downey where I did my High School. Later on I went to Northern Arizona University where I degreed in Industrial Engineering then matriculated to USC where I did a masters degree in Economics. Upon graduation I worked for Stanford Research Institute as an applied economist and worked for many of the large corporations that were doing economic feasibility studies for various investments and ventures after which I did some health care facilities and took a job in house as a chief financial officer for Presbyterian in Hollywood and then later, worked with Gateways Hospital which was a sister facility for Cedars-Sinai. I worked closely with the Jewish Federation Consulate at that point. And then moved over to Downey Regional Medical Center where I took a position, first of executive vice president and then CEO at the age of about 30 years old. A little too young for the job, but I didn’t realize it at the time. In the meantime I had many very interesting experiences working between two hospitals that we owned at one time, health plans, Knox-Keene health plans, insurance agencies, and a number of other corporations that we branched out into that were related to the medical field.
Dr. Seffinger: What is Knox-Keene?
Mr. Korneff: It is a piece of legislation in the state of California that allows you to get a license, to administer managed care plan that are complete or global risk plans where you take a sum of money and you provide all of the health care for an enrollee or member of that plan. It is the same as Kaiser Permanente operates in usually, includes medical group, hospitals and other medical related functions including pharmaceuticals.
Dr. Seffinger: So you were involved with that process of becoming administrator of managed care plans?
Mr. Korneff: As part of our background, we first developed some insurance products, some Medicare supplements. We had an insurance license to operate an insurance agency. We had a license to operate a Medicare products agency and we also were major stockholders in a total Knox-Keene health plan called Viva Health Plan at one time. We sold that out because it didn’t quite fit our product line.
Dr. Seffinger: And that’s all part of a Medical Center – part of their activities.
Mr. Korneff: Correct.
Dr. Seffinger: You had mentioned when we had talked previously a little bit about your ethnic relations as you grew up to help you understand people from different backgrounds and beliefs and how that played in your development into your position that as a CEO as well.
Mr. Korneff: I was very fortunate in that regard. My great-grandparents came over from southern Russia at the turn of the century. About 1900 and the family settled all over the Western United States. My grandfather settled in Boyle Heights or City Terrace which was kind of a melting pot community at that time. Primarily some Russian-Americans, some large Jewish population and I think there were some Asian at that point. And Spanish-American or Mexican-American to a lesser degree. Los Angeles was a small village of around twenty-five thousand people in the city. It was quite small when you think of it. Later in life I always seemed to have affinity because I lived with the community and even in the old country we shared the holidays and many beliefs with the Jewish community. Although we weren’t Jewish, we pretty much adopted the torah as a basis to our faith. As I moved along, and lived with, during my childhood, with the Spanish community, I also was able to adapt to their culture and have great appreciation for the Mexican-American family that was very family oriented, was very protective of their young and nurturing and coaching and I found this to be a wonderful thing. Later in life I obtained a degree in cultural anthropology at Northern Arizona University and worked at the museum where I interacted a great deal with the Hopi Indians and found them no different than most other people that I had been with in life. I felt very comfortable in accepting their value systems and religions and I think it helped me a great deal later on in life and dealing particularly in things that did not necessarily meet with some of the values that I might have been brought up with and certainly enabled me to deal with ambiguities which I attribute to my survival in this position over the years.
Dr. Seffinger: How long have you been working at this position?
Mr. Korneff: I’ve been here at Downey, a CEO for almost thirty-six years now so probably the longest tenured CEO in California for sure and maybe in fifty states, I’m not sure.
Dr. Seffinger: So you are quite adaptable and you can get along with a lot of people from various backgrounds?
Mr. Korneff: I find that easy to do and enjoyable.
Dr. Seffinger: How did you first become involved with the osteopathic profession?
Mr. Korneff: Well, I first became involved by a college buddy of mine whose father was one of the instructors at the Osteopathic University at Kirksville and we talked a great deal about his father and his father’s practices. His father did a lot of OB GYN and he was destined to become an osteopathic doctor also he did in later life and I visited him a great deal and underwent some treatment and got some explanation on similarities and dissimilarities and how the osteopathic profession was more holistic and looked into aligning body functions before resorting to medical medicine. So early on I was familiar with it. Later of course, in life it was when I was working as CEO in Downey and we acquired a hospital that was within three miles of us, it was primarily an osteopathic hospital and I knew their administrator quite well and we had a lot of time spent in discussing administrative matters and the practice of medicine and all and of course eventually owning that hospital brought me to being very involved in osteopathic practices.
Dr. Seffinger: Okay, so let’s see if we can orient ourselves to the timing of all this. When you first became CEO here, what year was that?
Mr. Korneff: That was about ‘72.
Dr. Seffinger: Okay, 1972. And at that time, what was going on at the hospital that you later acquired, Rio Hondo Hospital, which was three miles away?
Mr. Korneff: Well, they were parallel to the Downey regional medical center. There was almost a distinct practice there, although some of the doctors did practice at both facilities, there’s only about a half a dozen that did. The Rio Hondo Hospital was made up primarily of osteopathic doctors. They had their own primary care practice group and a very well-founded specialty group that had all the sub-specialties of medicine, gastroenterology , cardiology, I think all the sub-specialties other than orthopedic surgery, they might have had that also, I don’t know, general surgeries, thoracic surgery. So they were an all inclusive facility that referred patients within itself, known to be an Osteopathic hospital in the area.
Dr. Seffinger: And who was the CEO of that hospital?
Mr. Korneff: Isadore Weinstein was the CEO at that time. Became very close friend and colleague, we participated before I even came to Downey; we were participating in many committee functions within the hospital associations together. Isadore usually was a committee chair because he was such a capable chairman and had such leadership skills, and I always marveled in his ability to bring consensus and come to conclusions on topics that were very difficult. I consulted with him a great deal when I came to Downey and collaborated with him. Isadore was a little older than I was, and definitely wiser.
Dr. Seffinger: Was he like a mentor in a sense?
Mr. Korneff: Yeah, I’d say so. I’d come up with problems I’d never experienced before and he’d go through some methodology and insights into his experiences and life. I also found that he’d do that with physicians also on his staff.
Dr. Seffinger: Okay, and what did you notice that was unique or different about DOs and the osteopathic progression at the time you began your association with them, and did that perception change over time?
Mr. Korneff: I found that between the two hospitals, I found that the allopathic doctors tended to have a seemingly more rigid academic orientation, they tended to be much more structured socially, and were... I think primarily because of their treatment by the public and their protection of their status as professionals it developed an aura about them of superiority, where I found that the osteopathic physicians, for no better term, are much more collaborative in grass roots in their approach to the practice of medicine and problem-solving – a little more approachable.
Dr. Seffinger: And did you have a chance to interact with any DOs at that time, were they allowed to be part of your hospital staff?
Mr. Korneff: There was no prohibition against DOs at that time, but we only had the maximum of half a dozen DOs on our staff, and it was, I think, due to their choice. I think the DOs were more comfortable in their own facilities with their own colleagues. Most of the doctors at Rio Hondo had graduated from the same university, they felt comfortable with each other as a brotherhood, and I feel that we were a little more aloof over here. It was more difficult to come to Downey, feel comfortable, not that anybody was shunning you, it was just that people weren’t quite as friendly and didn’t quite go out of their way as much to make you feel comfortable in the environment; and over at Rio, everybody, the DOs, felt comfortable, they were among people they knew, so I think the two staffs kept somewhat apart, although, again, either Downey physicians could apply to Rio, Rio physicians apply to Downey, and they were accepted, but they didn’t practice there.
Dr. Seffinger: So was it that both hospitals were mixed staff hospitals? They weren’t all real barring of one or the other, MDs could go to Rio Hondo? And DOs could come here, it wasn’t like that, it was mixed staff by the time you came in?
Mr. Korneff: It was mixed up, but they weren’t mixed much. There might’ve been six MDs, I mean that were on staff at Rio. There were a number of the Rio doctors that converted to medical doctors at that time in history whether it was the sixties or the seventies when they were able to do so. But they were trained osteopathic doctors, so there were not more than half a dozen osteopathic doctors on our staff, nor more than half a dozen allopathic doctors on the Rio Hondo staff, it was a matter of choice.
Dr. Seffinger: At that time period, to help us understand the relationship between a CEO and a position staff in the 1970’s, and that has obviously changed over the last three decades. Can you give us a sense of what that was like?
Mr. Korneff: Sure. I think at the medical staff or the allopathic staff at Downey, there was a much more structured relationship between a physician and administration. The administration you might say had their own role in the hospital, and the physician had their role, and you didn’t find the two crossing over into other roles in even an assisting manner. So the administration wasn’t invited to a lot of the medical staff even committees. Definitely it was not on an invitation to sit in the medical staff cafeteria. Where in at Rio, having been there many times with Isadore, I found that Isadore and his staff sat in medical staff committees in those days, they ate with the physicians, they talked about medical problems with the physicians, and there was a more collaborative environment there. That was necessarily just characteristic of Downey, I found that at Presbyterian and Hollywood also, it was a different era, different time, in medicine.
Dr. Seffinger: And that changed, so now it’s a little bit different?
Mr. Korneff: Oh, it’s much different today. I think the new physician today has been trained more allopathic and the physician is raised in a different era of collaboration, working with people, they understand that practice of medicine has gotten so complicated that you have to pull together to get the job done whether it’s in clinical pathways, evaluation of quality measures, or whatever, we have to work very closely together and understand each others’ role and assist each other, so today is quite different.
Dr. Seffinger: Over time, so you’ve had a good opportunity to interact with physicians, both MDs and DOs, for the last 36 years. Did your perception of the osteopathic profession or the DOs change over these decades as well, compared to your first impression?
Mr. Korneff: Well I would say so. Just because of ignorance. You might say, being raised more in an MD environment, the MDs would paint a picture that the DOs weren’t necessarily as rigorously trained in the didactics and that they used techniques that were not necessarily medical techniques. As time when on, I found that the similarities were much closer, and even though the DO program might not be quite as structured as some of the university MD programs, I can’t speak to them all, the osteopathic medical student does get a good training there, they come out very confident, they score, our graduates here score in the top five percent of the nation in taking their boards. And that’s nothing to blink at, that’s really saying something so I think everybody, not only myself, but my MD staff here and my administration, have a great deal of respect for the osteopathic programs.
Dr. Seffinger: What do you perceive is your role in the history of osteopathy in California?
Mr. Korneff: My personal role?
Dr. Seffinger: Yes.
Mr. Korneff: Well, not a great role, but I feel that because of economic circumstances in southern California and seemingly California’s a melting pot for innovation and change, I’ve played at least a small role in putting together the MD and DO traditions into one functioning organization at Downey regional medical center, and also working with a number of the DOs and putting together a totally integrated delivery system on a capitated basis similar to Kaiser Permanente in a limited geographical area. That ended up to be, really, a model for a lot of other systems within the United States. It was exalted by the Governance Institute out of Washington DC, they studied us, they wrote a book on how to do it, so I feel that not only the MD but the DO and Downey Regional Medical Center and Rio Hondo were very instrumental at putting together some very, very innovative things. Besides merging our institutions and staffs, we were able to innovate some new methods of managing medical care.
Dr. Seffinger: Let’s go into those in a little more detail. This would answer to the question what events were you personally involved that had an impact on the history of this profession and I think this will come forth as you describe these landmark events. Let’s start with the things that occurred I believe everything began in the 1980’s with the managed care changes that occurred in California and I think a lot of it started in Southern California in particular.
Mr. Korneff: That’s correct. I think that the pressures built on the cost of health care and keeping down the cost health care we saw new forms of delivery systems that evolved. The most notable one was Family Health Plan or FHP. FHP targeted themselves largely at seniors. The plan basically provided both medical and hospitalization and drugs and all other health care needs to the senior with no co-pay and no deductibles. For fixed income people, people immediately gravitated toward FHP from all over Southern California. As a result, we saw patients leaving the private practitioner and going to FHP. This was depleting a lot of the patients that were seen by the traditional doctor and this traditional independent practice of medicine. As FHP became a threat to other physicians and physician groups, we saw them banding together and consolidating physician practices into bigger and bigger practices so they can also get into business, competing for patients through bargaining and negotiating rates with Medicare, Medi-Cal and all of the major players in order to provide that care in an integrated or a managed care environment. As this happened we also saw consolidation of hospitals so they could protect themselves against the large physician groups when it came to contracting, otherwise the big groups would dictate to the independent hospitals what they were going to pay them. California, as a result, consolidated to the point where most medicine today is practiced in groups and there are very few free standing hospitals. I doubt if there’s more than twenty free standing hospitals in the state, Downey Regional Medical Center being one. As this consolidation happened, we saw that our physicians at Downey Regional Medical Center and our referring groups had been bought up by these big conglomerates and we no longer had a referral base at that point. So we felt we had to get really innovative and if there was some way that we could capture that market with some innovative delivery system that would bring those patients back to stay with us, we were going to do it. As a result, we developed a kind of unique model that we put together as an integrated medical delivery system under a capitated payment basis for senior citizens. That didn’t just come overnight. There were a number of other products that came before it. We developed an insurance agency. We bought a Knox-Keene HMO called Viva Health Plan and we experimented with different products and different methodologies until we finally zeroed in to a system that looks something like Kaiser Permanente Health Plan for Seniors that only would exist within a five mile radius of the hospital .We used the hospitals reputation to sell these people, telling them they could still come to their hospital if they signed up with us and if they signed up with someone else, they’d have to go somewhere else. We in turn cancelled all other Medicare, HMO products with all payers. That meant Blue Shield, Blue Cross, PacifiCare, SCAN and anybody else that was in the business so that people could not access our facility without coming to our own plan. Therefore, we controlled the total dollar and the hearts and minds of those that were part of our plan. We teamed up with a Dr. Leonardo Barazowski of American Health Medical Group and as a doctor group component, initially. We used Downey Regional Medical Center as the hospital component and we contracted with some skilled nursing facility to do the skilled nursing component. Then that went along very well at which at one point Dr. Barazowski decided he was going to sell his organization and get out of the integrated delivery system business and they had an initial public offering, they sold American Health and we were able through a prior agreement to retain our Medicare lives [patients] and we were at that point in the market for another medical group. We tried to organize the physicians on our medical staff into providing the primary care, but because of their conservative nature and their orientation they refused to contract with us to provide that HMO type of medicine or capitated type of medicine. After numerous attempts we finally had to give that up and began to look at other avenues. At this point we had pretty much lost our whole primary care or family practice medical staff to the MedPartners and the various major medical groups. We lost Mulliken, we lost Friendly Hills, and we lost Gallatin Medical Group to Presbyterian [Hospital].
Dr. Seffinger: So at that time, these different GP oriented medical groups were contracting with specific hospitals, right?
Mr. Korneff: That’s correct.
Dr. Seffinger: And so you didn’t have a GP medical group anymore, they went off to other hospitals, because the specialty doctors at this hospital didn’t want to sign contracts with them.
Mr. Korneff: That’s part of it. The other part of it is, the bigger groups that grew, like MedPartners that they joined, would contract with hospitals at the lowest price they could get, they would go out to bid. Those doctors had to admit to those hospitals under those plans and really had very little choice. Plus the fact that our hospital couldn’t contract for any of the specialty services because our specialists, in large, refused to take capitated business.
Dr. Seffinger: And what is capitated business? What does capitation mean?
Mr. Korneff: Well, in contrast to fee for service, medicine was always practiced in the United States on a fee for service or a physician would provide a service and he’d bill you for the services he’d provided. For surgery, i.e., an appendectomy, it would be $500 or an insurance company would pay the $500 or some percentage of that $500. In capitated business, the hospital would receive a fee, and it was piece mealed out, and what would happen under that, an insurance company would never know how much it cost them to take care of a patient in any one year and so premiums tended to escalate as utilization increased. In capitated business an employer could be guaranteed a premium, an insurance company would take that premium, we’ll say $100, and they would give 25 to the doctor, 25 to the hospital, and they’d retain 25 for skilled nursing and 25 for pharmacy, and that would pay for all of the patients’ needs. Now the doctor and the hospital and everybody else would go at risk betting that they could take care of that patient for the amount they received in advance or prospectively for the care of that patient.
Dr. Seffinger: So they would get no more than that?
Mr. Korneff: That would be it.
Dr. Seffinger: That’s why it’s called capitated.
Mr. Korneff: That’s right. So it was a different way of paying, it was a different financing mechanism for paying for medical care and it incentivised the hospital and the doctor to work together closely to provide the most efficacious medical care it could provide that patient and to keep that patient well. We used to pay for sick, the big difference with capitation was paying the doctor and hospital to keep the patients well. So it was a major change in philosophy in the practice of medicine in southern California.
Dr. Seffinger: Ok so how does this now relate to Rio Hondo Hospital and its relationship to Downey Regional Medical Center?
Mr. Korneff: I think what happened at Rio Hondo is, Rio Hondo had a couple of major medical groups. One was a specialty group and one was a general practice or family practice group. Elmo Raymond headed up the general practice/ family practice group and Dr. Sheldon Zinberg had the specialty group. They had almost all subspecialties in the specialty group. Rio Hondo, for one reason or another, did not involve itself in the integration of the mega-groups. They did not sell their practices and become part of the HealthCare Partners or MedPartners type mega-groups. For what reason, I don’t know. As a result of that, the big mega-groups were able to contract with the insurance companies and drive the business to themselves and they drove a lot of the business out of the osteopathic practices at Rio Hondo by capturing large employers on a rate basis. So Rio Hondo found, the doctors found, some of their practices drying up. That also caused the specialty practices to dry up. So they were available, you might say, they were the only primary practice group in the area that had not been absorbed. And coincidentally also because of that, the hospital wasn’t having as many admissions. Rio Hondo Memorial Hospital was owned by a for- profit chain and the owners saw the problems in Southern California and decided to start selling their hospitals. We bought the Rio Hondo Hospital because we felt that once buying the hospital, we could collaborate with the physicians and find a way to rebuild our primary base again. Knowing we had some expertise in the managed care or capitated market, we thought we’d explore that. Both Dr. Raymond and Dr. Zinberg were quite interested. It provided them, a way to stay somewhat independent, not be absorbed, build their practice and have a very unique, integrated delivery system where they could really make a difference in the way they managed the care of patients. We shared the same philosophy and we started working towards putting a large group together and integrating that into a health care delivery system. Once that was done, we transferred the patients that were ours from the Berezovsky practice over to the group practice of Rio Hondo Doctors, what was to become CareMore and they began caring for those patients.
Dr. Seffinger: Now, this was in the 1980’s. In the 1970’s there was a concern by the MDs that the DOs may not have had as good training as theirs and they didn’t affiliate too much with DOs or even ex-DOs at that time. But in the 1980’s because of this economic pressure, that became a secondary concern, is that what happened?
Mr. Korneff: Yeah, I’d say so. Actually, the whole putting together the Rio Hondo deal, with the DOs-it really happened about the mid-90’s. We started about ’92. The trend in Southern California started in the late ‘80’s with FHP and then by the time we were able to develop this system and join with Rio Hondo is probably the mid-90’s.
Dr. Seffinger: Initially when you first met the DOs, there was this concept amongst the MDs at this hospital that perhaps they weren’t trained as well and their education was different and therefore they didn’t really interact too much. But now, it’s actually 20 years later, they’re forced economically to interact and so what happened to that concern?
Mr. Korneff: Well, what really happened at that point is now you had a situation where the DOs were controlling the patient flow. The members or the patients were actually, for no better word, a member or property, of the primary care physician. And they controlled the direction and flow of the patient. Whether it was a rationalization by the specialists that were MDs, being they were being referred to them for the specialty care now, that the patient was getting a full spectrum of good care, or whether it was the fact that they were getting patients that were well cared for and not train wrecks, it was probably a little bit of both. They were able to see the patients that were seen by DOs and find that these patients were well cared for. The economics drove them together. And they were all, you might say, incentivised toward the same end. That was to develop clinical pathways to best care for that patient and they had to work together to make sure that the patient got cared for in a timely matter, went home, and was kept well. I think that went together in a very natural way because of the economic pressures that drove it together.
Dr. Seffinger: Okay, then let’s then discuss your responsibilities in this time period. Where you now have bought Rio Hondo, what were some of your goals, your challenges, failures and successes that were involved with this whole process that involved both the DO and the MD professions?
Mr. Korneff: Well, of course the challenges were to, especially with seniors, to make sure that they were kept well, and to make sure that it was done in an economical manner or a efficacious manner. In order to do that we had to measure outcomes to make sure that the quality was as good if not better than the quality we’d seen in the care of our patients in the past. So we had to develop clinical pathways that would guarantee that when that patient hit the door of the doctor’s office or the hospital, all the right things were being done on a consistent basis. The second thing we had to do was set the standards of performance that we expected and the outcomes we expected. And the third thing we had to do was we had to have measurements in place that we could measure and a feedback so that we could re-educate and take measure to make sure we’re going through that cycle. So we had quite a development process and I can honestly say Dr. Zinberg and his staff were quite excited about doing that, believed in it. We started out, not with sophisticated computers, we started out with three by five cards for every doctor. And he or she followed those protocols when he treated his patients. And if the doctor didn’t follow the protocols, they were called in and asked why they didn’t follow protocols, and if not willing to comply with the protocols, they were asked to leave the practice. So there was a whole monitoring, mentoring, and peer review process that was put into place and that was quite a challenge and it worked very well.
Dr. Seffinger: So the ultimate goal then was to keep patients healthy so they would not incur an expense because when they were sick, they would use up medical dollars that really were capitated. You didn’t have much to work with so you were incentivised to keep patients healthy. In order to do that you had to follow protocols on how to do that, make sure people didn’t use their own methods that may actually end up costing more money or make the patient more ill or cause problems on both ends economic and health-wise. You’re kind of merging the two needs basically.
Mr. Korneff: Correct. Of course the negative outcome on it is a positive. One, we were successful and we did very well and our outcomes are better and our readmissions were less, and our infection rate was less. On the other hand, we found ourselves with patients stays in the hospital being half of that of the national average. Now instead of having two full hospitals, we had two half empty hospitals. So that led to the next step which was the merger of the two hospitals. Of course, prior to the merger, we did integrate the two staffs in block transfers so that both staffs had the other staff's physicians records so duplicate credentialing was not necessary. They accepted a proctoring of both sides and they merged the two medical staffs so that Downey Regional staff was on the Rio Hondo Hospital medical staff and visa versa. This made it very easy when a year later we had two half empty hospitals to close one of the hospitals. The obvious was to close one of the hospitals and physically merge the MDs with the DOs. I could say it was done uneventfully, transparently, and without any friction whatsoever. Which was, I think, quite amazing to a lot of people.
Dr. Seffinger: What year was that?
Mr. Korneff: That was about 1996, I’d say. Around that point.
Dr. Seffinger: And so you then closed down Rio Hondo. The DOs that moved here and than you had an interesting situation. You had all these outcome measures in place and critical pathways and now you had DOs and MDs in the same hospital or ex-DOs that became MDs as well. You had a mixture of three types of doctors, really, that were all working together but they are all being measured by the same outcome measures.
Mr. Korneff: That’s correct.
Dr. Seffinger: nd so what did you find in the first couple years there while you were working all this out?
Mr. Korneff: Well there were a number of things we found. We found that some of our MD general practitioners couldn’t hit the standards. And therefore had some privileges decreased. We found that a lot of our MDs we brought over the medical school students and residents from Rio Hondo to Downey, were challenged by these young bright adults.
Dr. Seffinger: Were they osteopathic medical students?
Mr. Korneff: They were osteopathic medical students from Western University, and they actually raised the bar a little bit for everybody. Because even the allopathic doctors were taking rotation, they were rotating through their offices, they were mentoring them in the emergency room and surgery and happy to do so. It kept them sharp. They enjoyed the tutoring; they enjoyed having to do a little research themselves to answer the questions. Overall, it upped the whole level of practice and generated a lot more respect by the MDs. I don’t know if it worked inversely, but the MDs here had a lot more respect, especially for the general practice practitioners from Rio.
Dr. Seffinger: So the DOs basically held up to their standards and they were able to show that they could produce good outcomes and take care of their patients.
Mr. Korneff: Right.
Dr. Seffinger: So that has disspelled a lot of the myth of DOs not being as competent and so forth.
Mr. Korneff: Correct.
Dr. Seffinger: And so that calmed things quite a bit. So then, you had this development of what was called CareMore. Could you explain what that is and how that developed and what has been going on with that?
Mr. Korneff: CareMore was the outcome of this joint venture between Downey Regional Medical Center and the osteopathic group that was over there, the osteopathic group being the specialists and the general practitioners that merged together, making up the CareMore Medical Group. What occurred was the CareMore Medical Group was formed. A CareMore medical management company was formed to manage the CareMore Medical Group, the hospital and the medical group owned the management company. The insurance company, which was called Golden Outlook was formalized and it was the exclusive product for seniors for the CareMore Medical Group and the hospital. And there were several corporations all working together at that time towards a totally integrated system. Integrated system meaning there was basically no separation between doctors, physicians, pharmacy, and the management of all the same. And we kept the patients totally within the system, so that they didn’t get out of the system, and the records and everything to do with that patient was integrated, and everybody knew what the care plans were, they knew what to do for the patient, and there was a total continuity of care. So that operated for several years, and worked very well during that period of time. Outcomes were good, economics were good, and patients loved it.
Dr. Seffinger: And Dr. Zinberg had an important role in that?
Mr. Korneff: Dr. Zinberg had a very important role. In order to succeed in this sort of endeavor, you had to be a charismatic leader, you had to be smart, and you had to understand how to practice medicine in a uniform and consistent way, and Dr. Zinberg knew that. He believed in it, and he was able to pull together physicians that were willing to take a chance and go with this system, and as a result, it was successful. But I can honestly say it would not have been successful if it weren’t for two things: one, we had a very unique senior product where we controlled the whole dollar. We were at risk and it was an opportunity to take better care of the patient and for the physician to be rewarded according to the level of care they provided. The health plan was critical, and the charismatic leadership of Dr. Zinberg and his understanding of organization management was the other critical component.
Dr. Seffinger: Now, not all doctors at Downey Regional Medical Center were happy and I think each of the successes we talked about, and some of the failures, probably had to do with some doctors that didn’t want to go in this direction.
Mr. Korneff: That’s correct. Traditional medicine was never practiced in groups, it was never practiced with going at risk with a set amount of money each month for the care of the patient that you were, as a physician, totally at risk at. It was not something that a lot of the older physicians had believed in. They had grown up in the traditional golden age of medicine, and on the fee for service basis, and many of them could not accept what had happened to California. Again, this was not something we did or created. The whole state, ninety, or ninety percent of the state’s patients were under a manage care program in their early nineties. Period. There were no fee for service indemnity type patients. And what had happened was the patients transferred to the HMO or capitated or integrated model. Which they did because they had no co-pays, they had no deductibles under those models, senior citizens who were on a fixed income sometimes couldn’t afford any other type of insurance, they couldn’t even afford Medicare. This afforded them the ability to have no out of pocket expenses, to have their health care totally taken care of by people they trusted, and what they did is they actually left their lifetime family doctors because of the health plan, and that would pay their total healthcare needs. And of course, this further devastated many of the traditional doctors because they felt there was a loyalty there between the patient and the physician, only to find out their patients left them and went to this new form of medical care, with a bunch of strangers, you might say. It created some tremendous hostility to the point where many of these doctors and their friends organized political active groups and they went to Sacramento and they tried to get the legislature to pass the legislation to make Downey Regional Medical Center, which was a free standing non for profit foundation into a city facility, and they actually drafted bills to be voted by the legislature to give the hospital to the city to take it out of the control of the people that were running this integrated system and into the hands of the city government. That did not happen because of various alliances and relationship that I and others had with the legislature at the time, through our childhood friends in East Los Angeles, I might say. But then they went on to presenting cases to every regulatory agency in the country. Making accusation that there was now malfeasance in the hospital, that money was not being used for patient care like it was supposed to be used for. They said that there was money being used to the private benefit of individuals on the board that triggered a whole string of investigations...
Dr. Seffinger: So these were just allegations that had to be investigated.
Mr. Korneff: They were allegations that had to be investigated, supported by board minutes that had been taken out of the hospital by whom we don’t know. They were investigated for a period of six years continuously. All allegations were unfounded and the hospital was exonerated from all those accusations but not without considerable damage to everybody in the organization both doctor and hospital.
Dr. Seffinger: So that put a little rift in between some of the old guard MDs that were here before the merging of the two hospitals and the CareMore people. So what was the end result of that? Did some of those people end up leaving or retiring or what happened to them?
Mr. Korneff: Well, the end result was most of them did retire. They were older physicians that were at the end of their practice anyway. It created a little bit of a friction between the city fathers which are your city council, city managers and the hospital because these people bombarded the city council at every meeting. And even today we still have some of the residual of that where there is a lack of trust. It also created so much problems for the CareMore Medical Group and the hospital that we could not come to a final end stage agreement as to how we were going to operate on an ongoing basis. As a result, that relationship did dissolve and CareMore and the hospital went their own separate ways.
Dr. Seffinger: Did that mean that you lost a lot of your general practice referral base to the hospital professions?
Mr. Korneff: They pretty much took the primary care referral base with them as a result of the termination of the partnership or the joint venture. Fortunately it was found that these mega medical groups that had been formed during the 80’s and 90’s weren’t working out too well, and they started to disintegrate. They just got too big, too top heavy and non-functional and some of the groups that had merged into like MedPartners tried to reform and with our help, did reform and did came back to Downey and backfill for some of that loss. So the Mulliken Medical Group did reform itself and call themselves Pioneer. So as CareMore left, the Mulliken group came in and replaced some of that volume.
Dr. Seffinger: You also had some interactions with Blue Shield right? They had patients that they had given to CareMore?
Mr. Korneff: Yes. What had happened is Blue Shield was a Knox-Keene organization. They had a license to provide benefits for senior HMO patients in California. They fronted our product which was called Golden Outlook. In other words, we subcontracted with them to do some of the administrative things. But they also technically owned those members. We had an agreement that as long as everything stayed in place, we would receive the benefits of those patients. With CareMore leaving, Blue Shield, as you know, was once a physician formed group in the state of California. Blue Cross was a hospital formed group. So Blue Shield always kept the philosophy that if they had to move patients, it will always be to the physician and not to the hospital. In the CareMore group, one of their executives put a lot of pressure on Blue Shield and got very close to one of their executives which enabled those patients to be moved out of our business model, into theirs. And so we lost our whole senior managed care base of patients which provided about 3 million dollars a year of profitable business to the hospital. Now it was gone. It was just simply transferred to the CareMore group and their insurance agency. We, then of course, had to look to other avenues to operate. What we did is just the opposite of what we had done several years before. We were forced to go back to the SCANs, HealthNets, and PacifiCares and the Blue Cross Senior products and work in a more traditional manner as far as HMO or managed care business.
Dr. Seffinger: Was there any problem at all with the Blue Shield or other companies, insurance companies working with the DOs or the ex-DOs at all?
Mr. Korneff: No. Not at all. You know they measure, these insurance companies responsible to the federal government and to the state of California to measure quality and outcome measures and they have to report those on a regular basis. And they have very stringent type of reporting mechanism and they monitor and audit you and they don’t care if you’re a DO or an MD. They want to see that that patient’s cared for properly, utilization is proper and the outcomes hit the standards they set for you. I might say that the DO group did develop a very sophisticated form of hospitalist that was a specialist in his own right and the hospital care was done by the hospitalist and so they have their own system of managing those patients and their outcomes are good and as far as I know, not only are there no problems, they are outstanding in the care of their patients.
Dr. Seffinger: So when I ask, how were you able to accomplish your goals, it sounds like there was a combination of your background and upbringing that helped you as well as the people you chose to relate with. You chose quality people that you could depend upon and trust. Is that accurate?
Mr. Korneff: I think so. In most cases, I made a couple errors along the way and it hurt us but if you look at the whole picture, health care is in constantly state of the flux and we were able to put the team together, to move with the times. It was definitely an accomplishment.
Dr. Seffinger: Who were your mentors, your supporters and then who did you mentor?
Mr. Korneff: Well, most of my mentors and supporters of course were my board of directors at the hospital for one. Others, of course in later years, were people like, I think we mentored each other, both the leaders at CareMore and myself depending on what the issues were. One would be a mentor one time or another. I would say the board of directors here at the hospital supported me a great deal. I think the management staff that I had supported. I don’t know. I think about mentoring; I did a lot of coaching of everybody to try to keep it in line. I think, unfortunately in some areas, there were different outcomes we were looking for. For instance, the hospital is a perpetuity organization, non-profit. There is nothing to be gained for anybody by maximizing profitability and it can’t be sold. On the other hand, human beings have finite lives and at some point they have to maximize their income, retire and go on their way, so the medical group has slightly different goals than the hospital and that was pretty unavoidable.
Dr. Seffinger: Were there any particular people that you would like to mention? Who were your supporters, people who really made a difference in your career?
Mr. Korneff: One of the people early on that really made a difference was Dr. Kay at the Kaiser Medical Group. I worked with putting together some prepaid or capitated dental plans with him in my young years that I learned quite a bit about the Kaiser system. He developed a Permanente group. He was a founder of that. I could say that Dr. Zinberg was always very inspiring in his ability to get collaborative effort from his colleagues. Of course my board supported me a great deal until the end when they felt the two goals of the two organizations were incompatible and chose to make a decision not to continue the model. I myself felt that even under the worst scenario, the model would have outperformed the experience we had after the group left.
Dr. Seffinger: In terms of the osteopathic profession, I know you have a residency here that you decided to keep on, what were some of your greatest challenges in relation to the osteopathic profession in California that you have basically adopted in a sense that came along with that whole decision some ten years ago?
Mr. Korneff: I think some of the most interesting challenges...well one is just to get enough osteopathic fellows to carry the program for us here. That’s always been a challenge. We’ve had people step up to the plate, and take on those responsibilities, awesome responsibility to take on that whole program. Second thing was, is to work these students in with the MDs or the allopaths and get them to rotate through offices and through their practices and to make rounds with them. But you know what, once a few of them took it on, the rest followed, and those who are doing it really enjoy it very much, so that’s been really rewarding. I can say the medical students have been great to have around, its great to have young physicians on board and challenging our doctors and asking a lot of questions and finding these doctors on the computers in the library trying to dig up answers from their day of rounds. I would say other than that, I don’t find anything but a positive thing being involved in the program.
Dr. Seffinger: And you did consider whether you were going to have residencies involved with some of the other medical schools around the area and/or an allopathic residency program, and what made you decide to stay with the osteopathic program?
Mr. Korneff: Well, I think we’re going to stay with the osteopathic program under any circumstances. We were approached to also start an allopathic program here. When we looked at the structure of the allopathic program and the costs associated with the program, it was not economically feasible to do it for one, it was almost a distraction because they have such detail. There are more detailed academically requirements of us to provide teaching orders and offices and space and secretarial services for the professors to come in and rotate. Some of the salaries requirements are astronomical, they are inconceivable to me. Some chairs pull a million dollars a year. This is just not in the realm of this kind of facility. In a big university facility where the government steps up and pays the hospital four to six times the amount per patient day as we get. They could afford to do those things. We are not paid that. We are highly discriminated against, the dollars do not follow the patient. For the same treatment and the same patient, we get from the government, say, 1,700 dollars a day from MediCal. If they go to UCLA they get close to 5,000 dollars per day for the same patient. They can afford to have those academic programs, we can’t. It’s just that simple. The osteopathic program works for the student, it works for us, it works for our medical staff. The other is not a good fit for us at all.
Dr. Seffinger: Since you’re measuring outcomes, you can always tell whether or not that decision is worthwhile or not in terms of does it harm basic care, does it help basic care, does it help the hospital or not, you can always tell whether or not your decisions are on an economic basis really affect health care by you having measured outcomes.
Mr. Korneff: Outcome measures as analyzed by independent, outside agencies, we come up as one of the top ten hospitals in all of Los Angeles every year. So our outcomes are just fine.
Dr. Seffinger: What advice do you have for future osteopathic physicians in training?
Mr. Korneff: That’s a good question.
Dr. Seffinger: Having almost four decades worth of experience in medicine in the Los Angeles area and interacting with both types of doctors, MDs and DOs, being involved in the training situation here.
Mr. Korneff: I think there are two things. One is to take advantage of every subspecialty we have on the staff and do a rotation with every doctor they can. Don’t be afraid to dig in and ask questions and be aggressive in their activities here at the hospital. I think, also to be as actively involved as they can with their peer group while they are here. It is not only a growth to their medical practice, it helps to grow their social skills and form a bond that they’ll take with them.
Dr. Seffinger: Do you find that the atmosphere you saw at Rio Hondo has been transported over to here with that collegiality sense?
Mr. Korneff: I think so. I think even more so. I think with Natalie Nevins here it puts a lot of glue. Bill Kim, Ole Hegeness. Those folks and just working with these people, there’s a great collegiality and feeling of family and belonging. I think it’s even better.
Dr. Seffinger: What advice do you have for future allopathic physicians in training?
Mr. Korneff: There I have less experience.
Dr. Seffinger: What about their relationship with osteopathic professionals?
Mr. Korneff: Well, you know what I’ve done to a lot of them that are in training? I’ve asked them to come by and spend some time with our people. I think it’s enlightening to them if they have some time to spend with us. Natalie has been willing to spend time with them. They might even take a rotation with some of our people. They may or may not get credit for it but it would be eye opening to see what we are doing here. I have one I just talked to this weekend that graduated from Florida and is going to Irvine and I suggested she come by and spend some time with us down here. She’d gain a lot from it. So I think if I have any suggestions, they have their own course, they have their own education system, but if they could spend a little time with us down here, I think it would broaden them a bit.
Dr. Seffinger: What doctors do you have or know about that we should look up for reference or referenced to corroborate the facts that you have mentioned in your replies?
Mr. Korneff: I’ve got a historical report, which I’ll possibly try to integrate with what I talk to you about, but we do have a history that’s in rough form, I would be glad to share. You’d only need the last part of it. The first part of it goes back to 1920.
Dr. Seffinger: Anybody else you think that we should contact that was instrumental in historical development of osteopathy in California, or involved with the relationships between the two professions?
Mr. Korneff: The only other person that I would say that would be a credible source if you wanted to talk to Sheldon Zinberg because although other people did chunks of it, we pretty much held it together, he on the medical side, and me on the hospital side.
Dr. Seffinger: And is there anything else that you would like to talk about or discuss in relation to osteopathy in California or relations between DOs and MDs that we have not touched upon?
Mr. Korneff: No, other than I think this place is an example of the way the two educational avenues could meet an intersection, because there is a great coexistence here, and I think a great deal has to do with the medical education program here.
Dr. Seffinger: Do you realize that you have a unique residency here that’s one of its kind in California, that is a residency in osteopathic manipulative medicine, as well as you are unique in that you have a hospital training for osteopathic students to learn how to use their hands in medicine on the hospital wards?
Mr. Korneff: I know they do it, but I didn’t know that was unique.
Dr. Seffinger: Well, in hospitals, as far as a structured educational program, and also you have some in the Midwest and East Coast, but not in California.
Mr. Korneff: Well it works. We don’t have problems with it, so that’s great.
Dr. Seffinger: Well, I appreciate this. I’m really happy that you had logged out this time that we can get your thoughts and perspectives, they’ve been very interesting. And if anything else should come up that you’d like to add, certainly feel free to add and I’ll get you a copy of this so you could look over the transcript and add and do what you like with it at that point.
Mr. Korneff: Okay.
Dr. Seffinger: Thank you very much.