Budget Cuts Spur Major Overhaul of Health Care

San Francisco Chronicle

A mother in Oklahoma had a 6-year-old with an inflamed navel. At Access Health Inc. in suburban Sacramento, which operates a toll-free "dial-a-nurse" program 24 hours a day, this was serious business.

Registered nurse Lynn Ayers strapped on her headset. After a series of questions, she deduced that it was probably no more than a tick or mosquito bite, a situation that suggested a little baking soda in the bathwater and close observation instead of an emergency trip to the doctor.

Another "empowered consumer" offered thanks.

"Honey," the woman told the nurse before ringing off, "I call you all the time. First I call my mother, and if that doesn't work I call the dostor. Now I can call you, and my mother's long-distance."

These kind of customers are making Access Health the market leader in a tiny but fast-growing segment of the health care industry known as "personal health management."

It's a cheap, friendly way to keep relatively healthy people from clogging emergency rooms. Health maintenance organizations foot the bill _ about 50 to $1 monthly per member. The hoped-for payoff comes in increased customer satisfaction, as well as more efficient use of high-priced services.

Access has about 5.6 million people under contract, including 750,000 in California.

Basically, it's consumers asking a lot of questions.

"We get everything from why do my fingernails have ridges on them to 911 situations," Ayers said.

Such services are expected to be especially useful in financially strapped public programs for the poor and uninsured. The main program, Medicaid, known as Medi-Cal in California, reimburses health plans to provide such care.

Partly to test those waters, Access Health last week donated its service to residents of Clara House in San Francisco, a transitional facility for formerly homeless people.

Residents said they could use the help. They spoke of long waits in city clinics and doctors who displayed little enthusiasm for dealing with the problems of Medi-Cal patients.

Even when treatment was obtained, emergency room doctors are so overwhelmed that they rarely give patients much in the way of guidance or hand-holding. "They don't tell you anything," said Clara House resident Lenora Hamilton.

Medical advice by telephone is nothing new. In the Bay Area, for example, Kaiser Permanente has a 24-hour pediatric advice line, while St. Mary's Medical Center ties a phone-in service to its home-health program.

In theory, almost anyone with a few nurses and an 800 line could compete _ one reason Access Health is viewed as one of the more speculative investment plays in the managed care arena.

It's also an unregulated field, generating a constant risk of malpractice. Access Health takes pains to keep its nurses from attempting to diagnose illnesses or prescribe medicine, which only physicians can do. The company said it has never been sued, although it warns investors of the possibility.

Because of the pitfalls, Dr. Robert Derlet, director of the emergency medical service at the University of California at Davis and a medical adviser to Access Health, says that providing medical advice by phone is well-suited to a specialist firm.

"You can't just willy-nilly design a system and have a few nurses do this," he said. "You have to have very strict guidelines to be sure everybody gets the same information when call with the same questions."

Access Health was founded in the mid-1980s from a hospital plan at Adventist Health System/West in Sacramento, dubbed "Ask-A-Nurse."

The program was spun off and marketed nationwide by management, led by Access Health Chief Executive Ken Plumlee. The company went public in 1992.

Now, some of the giant HMOs are taking an interest. The "Ask-A-Nurse" service was retooled for the managed-care market as "Personal Health Adviser." Blue Cross and Blue Shield plans have signed on in California, Pennsylvania and New York. Federal CHAMPUS programs for military dependents are being folded into the network this year in Texas and Oklahoma. FHP, formerly TakeCare, has 25,000 members enrolled in the Access program in Colorado.

Besides the Rancho Cordova call center at company headquarters, Access Health maintains similar facilities in Chicago and Phoenix. All three are connected into a single national network, which the compiny says can accommodate triple its current volume, now running about 2,500 calls a day.

The company employs about 175 registered nurses. They use Windows software to sift through 150 doctor-approved treatment protocols, weighing options and evaluating symptoms to determine the most appropriate course of action.

There's also a database of services available through each health plan for use in miking referrals. Consumers can call up hundreds of recorded messages on topics ranging from bunions to mitral valve prolapse.

A quarterly newsletter is mailed to people's homes. Specialized advice and monitoring can be offered to patients with cancer and some other chronic conditions. An Internet link is in the works.

Merrill Lynch stock analyst Stuart Goldberg calls it "a great service. They're going to be the gatekeeper to the emergency rooms."

What remains to be seen is whether Access Health's combination of sophisticated call-handling technology and medical expertise will translate into regular profits and steady gains on Wall Street.

After enduring a long money-losing period, the company reported a small profit of $237,000 on $7.3 million in revenues during the quarter ended March 31. But the stock, which is traded on Nasdaq and had climbed from about 15 to a high of 21 this spring, hit a downdraft in April. It closed Friday at 19.

Goldberg said the stock is too expensive to warrant a buy recommendation now. That could change, he said, if the company lands a few more major contracts.

Revenues from personal health management services, the core of the business, grew 10-fold from a year ago to $4.4 million. The company has a good chance to top 7.5 million contractual enrollees by the end of next year, Goldberg said, noting it would take just a handful of big health plans to do the trick.

The company's main challenge is to back up its efficiency claims with hard data showing health plans where they can save money.

Hewitt Associates, the big benefits-consulting firm, recently was brought in to study the impact of Personal Health Adviser after it was introduced to Blue Cross Blue Shield of Oregon's low-income membership.

The study found that a 28 percent reduction in the cost of caring for patients who could use the hotline. Key savings came in reduced visits to doctor's offices and emergency rooms.

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