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Loan forgiveness program to recruit doctors has few takers

Peninsula Health Care District funded plan for years

When the taxpayer-funded Peninsula Health Care District established a loan program to attract new physicians in 2003, officials promoted it as a way to address doctor shortages in parts of San Mateo County. 

The program was designed to help primary care physicians cover the costs of setting up private practices or relocating to the district, which includes Burlingame and Hillsborough, two cities with some of the highest real estate prices in the nation. Doctors who practiced in the district for four or five years would have their loans forgiven.

But nearly a decade later, no physicians have completed the program. The district has not actively promoted the incentives, even after expanding it in 2006 to include other specialties. As a result, critics say, hundreds of thousands of dollars that could have financed community health programs has languished over the years. 

“If there is a program that hasn’t worked for 10 years, you would think there would be a course correction, especially with so many dire health care needs in California,” said Anthony Wright, executive director of Health Access California, a consumer advocacy group based in Sacramento. “In the last 10 years, we had tough budget cuts to care for the uninsured and safety net providers. Given the district’s mission, it would certainly have been important for the district to fill in for the drastic budget cuts we’ve seen.”

Cheryl Fama, the district’s CEO, acknowledged that while the district desperately needs more doctors, “recruiting physicians isn’t our priority.”

“We are here to meet the needs of the community,” Fama said. “If there is a need, we have a physician recruitment program. It’s on our website. But do we go out and advertise it? No, we haven’t.”

About 30 publicly funded health care districts across the state no longer run hospitals, a Bay Citizen investigation in March revealed. Among them is Peninsula, which, along with many other districts, has amassed large reserves that are controlled by publicly elected boards that are charged with overseeing community health grants and vast real estate holdings. 

The investigation inspired Assemblymen Rich Gordon, D-Los Altos, and Roger Dickinson, D-Sacramento, to introduce tougher regulations, which, if approved by the Legislature, would require health care districts to spend at least 95 percent of their annual tax revenue on community health programs and services. The bill is still moving through the Legislature.

The closest the Peninsula Health Care District came to having a doctor complete the program was a recruit who enrolled in 2005. She received a $50,000 loan to open a private practice in San Mateo. But she left two and a half years later for a job outside the district. She has since repaid most of the $25,000 that remained of the loan, with interest, Fama said.

Another doctor, a surgical oncologist, was offered a $150,000 forgivable loan in fall 2010 to help her buy a home in the district. She must practice in the district for five years before having her loan forgiven.

From 2003 to at least mid-2008, the district budgeted up to $500,000 to fund the recruitment program. The initial idea was to be able to provide lump sums of $50,000 each to finance the startup costs for doctors establishing private practices or for medical groups recruiting talented doctors.

But in summer 2009, district officials realized that tucking away money for the program no longer made sense.

“It didn’t seem necessary,” Fama said. “It seemed like bad bookkeeping. It looked like we were inflating our expenses each year.”

Beginning with the 2008-09 fiscal year, the district began folding the money into a community health investment account, which included money for community grants. Since the 2010-11 fiscal year, at least $150,000 of that funding has remained earmarked for the home loan promised to the second doctor. The district has given her until the end of September 2012 to buy a house using the loan.

The incentive program is not a “carrot in and of itself,” Fama said, because establishing a viable practice requires new physicians to be affiliated with a medical group or hospital in order to ensure a steady flow of patients and overcome the expense of setting up a private practice. The high cost of living in the district and the stiff competition from neighboring hospitals and clinics do not help.

Health care experts are not surprised the district has not found many doctors interested in the loan forgiveness program, given the shortage of primary care doctors in the state.

"The physician workforce shortage in California, and around the nation, is a serious problem facing the future of medicine," said Molly Weedn, spokeswoman for the California Medical Association. "With baby boomers beginning to retire, federal health reform expanding coverage to millions of previously uninsured patients and increased chronic health conditions such as diabetes and obesity on the rise, we should be working to ensure more access to physician care."

Fama said the district stands ready to help: “We still have a program and a process should a physician come forward.” 

Local health care officials say just one more doctor in the area would make a marked difference.

"With a national shortage, it's getting more and more challenging to hire and keep primary care physicians," Susan Ehrlich, CEO of San Mateo Medical Center, said in a written statement. "Every additional full-time physician allows us to provide care for an additional 1,000 patients, and with nearly 3,000 people waiting to see a doctor, this would significantly increase access to care in our county." 

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