For the second time in five years, the Orange County Board of Supervisors Tuesday changed the board of directors of CalOptima, the $3.2 billion health plan for low income, elderly and disabled residents, and solidified the medical industry’s control.
The new, nine-member board, which begins work in August, will have three members with ties to hospitals, three doctors, two county supervisors and one representative of a community clinic.
The Supervisors voted unanimously for each of the seven new board members, selected from 15 finalists, with no discussion of individual qualifications.
CalOptima, which is financed with federal and state tax dollars but overseen by the supervisors, provides Medi-Cal services to about 790,000 county residents who make up roughly 25 percent of the county’s 3.1 million population. More than 40 percent of the members are children.
The Makeover
Former Supervisor Janet Nguyen, now a GOP state senator from Garden Grove and hospital lobbyists redid the CalOptima board in 2011 to give the medical industry a higher level of control. This is important because the board has control over things like supplementing the rates at which the state reimburses doctors and hospitals for Medi-Cal services.
Nguyen then drew heavily on the medical industry for campaign contributions, raising about $100,000 while her new ordinance was going into effect.
And both supervisors’ Chairwoman Lisa Bartlett and Supervisor Andrew Do, who serve on the CalOptima board and led the selection process for new board members, have received substantial medical industry donations.
For his June primary re-election campaign, for example, Do reported raising $36,000 from CalOptima contractors; and $40,000 from local doctors. About 80 percent of all doctors in the county participate in CalOptima programs, according to the agency.
As part of creating a new board, Do has said he wants a more engaged board that is willing to speak up on issues, which critics say was not the case when Nguyen was running the board.
“We want a board that is independent and is involved in the day to day workings of CalOptima,” Do said in January during discussions by the supervisors of changes to the health plan’s board.
The New Board
Lee Penrose is the president and chief executive officer of St. Jude Medical Center in Fullerton, part of the St. Joseph Hospital chain which also has St. Joseph Hospital in Orange, Mission Hospital in Mission Viejo and Laguna Beach and Hoag Hospital in Newport Beach and Irvine.
Earlier this month, Whitney Ayers, lobbyist for the Hospital Association of Southern California (HASC) and a onetime aide to Supervisor Todd Spitzer and former Supervisor Bill Campbell, sent the clerk of the Board of Supervisors an “updated resume” on behalf of Penrose.
There was no explanation why the hospital lobbyist, rather than Penrose himself, updated his resume but her letter said “If you have questions, or would like to discuss, please give me a call.” Penrose will hold the seat designated for a current or former hospital administrator.
Joseph Scott Schoeffel, a lawyer with the firm of Buchalter Nemer and former Dana Point City Council colleague of Bartlett’s, was named to the seat reserved for a lawyer or accounting professional.
According to his application, Schoeffel is the former lawyer for Integrated Healthcare Holdings Inc. (IHHI), which owns four Orange County hospitals and has been a generous campaign donor. He and the law firm also have current contracts with IHHI.
The company and its chairman, Dr. Kali Pradip Chaudhuri, have controversial histories and IHHI has changed its name to KPC Healthcare Inc.
According to the Los Angeles Times, “Chaudhuri bought and then closed a chain of medical clinics in 2000, shutting 38 clinics that served 300,000 patients across Southern California, including 56,000 in Orange County. He also invested in clinics that failed in 2001 and 2002.”
In 2005 he was replaced as IHHI’s chief investor when his connections threatened to block state licenses for four hospitals in Orange County that IHHI was trying to buy. The hospitals were: Western Medical Center-Santa Ana; Western Medical Center-Anaheim; Coastal Communities Hospital in Santa Ana; and Chapman Medical Center in Orange. But he kept ownership of up to 49 percent of the land.
Choudhuri returned to IHHI as chairman last year and changed its name after IHHI lost a $5.7 million civil suit in which the firm’s former CEO, Bruce Mogel, was accused of planting a loaded gun and drugs in the car of Dr. Michael W. Fitzgibbons, who had bested IHHI in a previous case. Schoeffel was IHHI’s vice president and general counsel from 2004 to mid-2014.
The county lobbyist for IHHI/KPC is Jeff Corless who was Bartlett’s campaign consultant when she ran for supervisor.
The CalOptima public seat for a resident of Orange County went to retired St. Joseph hospitals lobbyist Ron Diluigi, who, before he was a lobbyist worked for the county Health Care Agency for 27 years, at one point serving as interim director.
The board seat reserved for a CalOptima member or family of a CalOptima member was given to Dr. Alexander Nguyen, who is completing his residency in psychiatry at Harbor-UCLA Medical Center. Nguyen’s mother is a CalOptima member. His parents were refugees from Vietnam but he was born and grew up in Orange County.
Dr. Nikan Khatibi, a pain addiction specialist and Republican party activist, was appointed to the seat for a doctor in current practice who is not a representative of a contracted Independent Physician’s Assn. (IPA) or Health Network. He was recommended for the slot by Dr. Steven E. Larson, president of the California Medical Assn.
Anesthesiologist Dr. Paul Yost, who served on the CalOptima board in the late 2000s before Nguyen took over, is a doctor at Children’s Hospital of Orange County (CHOC) and St. Joseph’s hospital. He also is a former city councilman and mayor of Seal Beach. He will hold the CalOptima board seat reserved for a licensed medical practitioner in current practice who is not an owner or officer or member of the board of an IPA or Health Network.
The seat specified for a community clinic will be filled by Ria Berger, CEO of Healthy Smiles for Kids of Orange County, a Santa Ana nonprofit that provides oral health care for children.
You can contact Tracy Wood at twood@voiceofoc.org and follow her on Twitter: @TracyVOC.