Physician Keith Richman closes down his practice to confront the HMOs and the troubled health-care system in new position as California Assemblyman

Among the dozens of fresh faces this year in Sacramento, Assemblyman Keith Richman stands out as the first physician to serve in the Legislature since 1992. The GOP newcomer was chairman of the Mission Hills-based Lakeside Medical Group, until resigning his chairmanship last week to devote himself full time to his new legislative duties, though he remains on the group's board. He also closed down his practice, transferring his patients to other doctors.

Despite his party affiliation, Richman, whose resume includes a recent stint as a Riordan-appointee to the Community Redevelopment Agency board, apparently isn't afraid to take on the HMOs.

The day he was sworn in, Dec. 4, he filed a bill that has raised eyebrows across the state. AB 32 would require HMOs to offer a basic health benefits package for the working poor, among other provisions, that the state would subsidize.

A former registered Democrat and self-described moderate Republican, Richman spent $420,000 of his own money to defeat a conservative rival in a close March primary. He then cruised to victory in the general election, succeeding Tom McClintock, now a state senator, in representing the conservative 38th Assembly District, which stretches across the North San Fernando Valley, portions of the Santa Clarita Valley and into Ventura County.

A graduate of Birmingham High School, UC Davis, and UCLA, where he earned a medical degree and master's in public health, Birmingham has testified before Congress on health care issues, and plans to make that a focus of his Assembly tenure. He follows in the footsteps of his father, a Sun Valley physician and former community college board member.

Question: You're certainly kicking off your legislative career with a bang, introducing a far-reaching health care bill. Why initiate such a bold move as an incoming freshman?

Answer: I think that the problem of the uninsured is a very big problem. They result is high levels of uncompensated care that is a big issue for me that needs to be addressed. It would not only provide some relief to Los Angeles County's health care system but to private hospitals that are finding themselves squeezed financially.

Q: How supportive will you be in working to secure more funding for the overburdened county public health system?

A: I am very well aware of the financial difficulties the L.A. County health system faces, and I am going to work very hard in trying to make our health care system in general better. But my more general focus is going to be providing coverage for the uninsured.

Q: Do you have a good working relationship with Gov. Davis and Assembly Speaker Bob Hertzberg, both Democrats?

A: I have not met the governor, but in order to get anything done, especially given the makeup of the Legislature, you need to work in a bipartisan manner. I have a high degree of respect for the Speaker. His district is contiguous with mine, and we know each other from various community groups and activities. I think he is trying to set as much of a bipartisan tone as he can.

Q: What was it like practicing medicine in 1983 when you started?

A: It was very different. Back in 1983 there were no network model HMOs. The only HMOs that existed were staff models or group models, like Kaiser. My practice was completely fee-for-service. Now, when I just left my practice a couple of weeks ago, just about two-thirds of my patients were in HMOs and about a third of my practice was fee-for-service.

Q: What made you want to get into the business end of this, such as chairing your physician management group?

A: It started back in 1984 or 1985, when one of the physicians at Holy Cross Medical Center came to me and asked if I would be the president of this new group that I was forming that would contract with Maxicare, which was the first company that applied the concept of an HMO to a network model.

Q: Why was your company forced to close its Tarzana office last year?

A: We were losing a significant amount of money in that regional area. We had given notice to the various health plans about eight months before that, and also to the hospital, making them aware we were losing large amounts of money and we would need to renegotiate our contracts. It was not something we wanted to do. We understood the potential disruption to patient care. But our decision to exit made it possible for us to be much more stable overall.

Q: What's your response to the HMOs' position that the physician groups that are closing are poorly managed?

A: There are certain groups that may be better run than others, but I strongly believe that the reimbursement levels are too low. Ten years ago, in 1990, medical groups like ours were receiving about $42 per person per month to care for them. Ten years later, groups like ours are receiving $36 per month per patient. Not only are those not inflation-adjusted dollars, but there have been many new technologies that doctors have to provide, which increases their costs.

Q: What economic factors led to physician reimbursement rates being so low?

A: While we were in the recession back in 1990, you would read that health care costs were making American not competitive in the world economy. So the marketplace has driven insurance premium prices here in California down to the lowest levels in the country. There also has been a consolidation of the health plans, and the plans have been bidding lower premium prices to employers in order to gain market share.

Q: So what's your prescription for a cure?

A: I think it is important that the health plans understand that it's their responsibility that the premium levels cover the cost of care. If the market itself doesn't correct, then there would only be certain steps you could subsequently take. Those would require more regulatory oversight of premium and reimbursement levels.

Q: As a Republican assemblyman, then, are you suggesting some level of state control over that?

A: I am not saying that at all. I am by nature a free-market person, and would like to see the free market work the problem out. Only as a last resort and certainly not in the near future would I look to put more regulations on premium prices and reimbursement levels.

Q: Do you know HMO industry point man Walter Zelman, president of the California Association of Health Plans, and Zelman's nemesis, Jamie Court, director of Consumers for Quality Care?

A: I do know Walter and have met with him as recently as this past Monday. I do not know Jamie Court, but in the process of drafting legislation and fleshing out the specifics of legislation, I need to work not only with health plans but also with consumer groups and various agencies within the state.

Q: Beyond health care, what will be your agenda in Sacramento?

A: I am not only interested in answering some of the problems we face in health care, including the problems of the uninsured and the cost pressures on medical groups, but also I am interested in issues like education and the need to invest in our state's infrastructure.

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