A group of doctors, fighting for what they say is control over patient treatment, is trying to derail the sale of MD Individual Practice Association Inc., one of the area's largest health care organizations, to a major national insurance company.
One of the doctors yesterday filed suit in U.S. District Court in Baltimore seeking to block shareholders meetings scheduled for next week to approve the sale of the company, which is based in Rockville, to Cigna Healthplan Inc., lawyers said.
The suit alleges that MD IPA, which provides health care and insurance for 75,000 Washington area residents, has violated federal securities laws by misrepresenting the sale in its proxy statement to shareholders.
A group of doctors opposed to the plan also is trying to persuade colleagues, who own much of the company's stock, to vote against the proposed sale.
Cigna Healthplan, a subsidiary of Philadelphia's Cigna Corp. and one of the largest investor-owned operators of health maintenance organizations, agreed in December to buy MD IPA and its companion company, Physicians Health Plan of Maryland. Doctors opposed to the plan estimated the sale price at $40 million, although MD IPA officials refused to confirm this.
At immediate stake is the future of one of the fastest-growing area health maintenance organizations. But the proposed sale also has raised larger issues that are increasingly familiar to the nation's rapidly changing health insurance and delivery industry.
The last several years have seen spectacular growth in the number and size of health maintenance organizations, commonly known as HMOs. Unlike traditional fee-for-service insurance plans, HMOs charge members a set fee for a range of medical services on the condition that they use only those doctors and hospitals selected by the plan.
While the concept has been hailed by many analysts as a means of cutting skyrocketing medical costs, many doctors have contended the trend has eroded their traditional control over patient care.
MD IPA, which began in 1981, is not a traditional HMO, but what is known as an individual practice association. Although MD IPA patients pay a set fee for services, MD IPA's doctors operate much like traditional private practice physicians. Its 1,200 primary care doctors and specialists care for MD IPA's members and other patients out of their own offices, rather than in a health care clinic.
Although company officials have stressed that the operations of the IPA will not change as a result of the sale, doctors opposed to the plan say they fear losing their autonomy and control over decisions about patients. They also said the sale will disproportionately benefit members of the board of directors and management, who hold sizable amounts of stock in MD IPA and Physicians Health Plan.
"I am interested in pursuing the private practice of medicine, where a doctor takes care of his patients without interference from the insurance companies," said Mark A. Immergut, a urologist associated with MD IPA. "That's what doctors are interested in -- patient care. Insurance companies are interested in market share."
Lawrence H. Fink, who practices in Bethesda and Laurel, said that, if Cigna takes over, he fears the company will subject doctors' decisions strictly to cost calculations, rather than what the patient needs.
A spokesman for Cigna Healthplan said that officials involved in the sale were not available for comment yesterday. A spokeswoman for MD IPA said the organization's president, Gino A. Nalli, refused comment beyond a company statement that the proposed sale "will result in an expanded choice of services and benefits" for patients.
"There are no plans to change the organizational structure of MD IPA in which medical services are provided through local, participating private practice doctors," the statement said. "Final steps for the acquisition await the decision of a vote of the shareholders."
The suit was filed yesterday in Baltimore by Dr. James L. Hooper of Gaithersburg. He alleges that the proxy statement concerning the sale misrepresents the terms of a stock option plan and that the company failed to provide a stockholder list as required by securities laws.
That proxy statement, outlining the proposal for MD IPA's shareholders, raises management fears that MD IPA would have difficulty competing alone with the growing number of national companies such as Hospital Corporation of America, American Medical International and others which are making a big push in the HMO field. Management has contended, and analysts agree, that there would be significant marketing advantages in being linked to a big insurance company.
Doctors fighting the sale said, however, that the company is in sound financial health. MD IPA reported revenue of more than $19 million and profits of $250,000 in 1984, according to the prospectus, which did not disclose 1985 results.