Kenneth Smole, NORCAL Mutual Insurance Company Vice President of Business Development and Strategic Planning, reported on the current status and future of professional liability insurance. He stated loss estimates from the 9/11/01 tragedy have stabilized; yet it is still the largest event in insurance history by far. Litigation over "9/11" loss payments is well under way and will continue for years. Reinsurance losses for 2003 are higher than anticipated. The financial health of reinsurers is acceptable but deteriorating. There has been a great deal of consolidation in the reinsurance field. The reinsurance outlook for 2004 is that capital shortage will continue, marginal reinsurers will most likely exit the marketplace, conglomerates will try to exit by selling off their operations, spinning them off or winding them down and top reinsurers, who focus on solid underwriting, are likely to be long-term winners. There are only five to six companies in the state writing new business for malpractice insurance. Companies that have been successful in business for 20+ years are now having significant problems. Malpractice carriers in California have changed their stance in the last five years. NORCAL requested a 9.9% rate increase. The California Department of Insurance approved 2.9%. As a result, NORCAL will not pay any dividends for 2004. Southern California policyholders will see approximately a 15.6% increase in their NORCAL premiums. Mr. Smole reported SCPIE was downgraded by A.M. Best to "B"' as was MLMIC. NORCAL continues to be rated "A".

The Board received an update on the Pacific Foundation for Medical Care (PFMC). In September SBCMS submitted a request to PFMC to terminate the CFMC related network in San Bernardino County and assign the membership agreements, contracts and credentialing files to the Riverside County FMC (RCFMC) who would then be responsible for managing the San Bernardino County network as part of its relationship with CFMC.

Dr. Steve Larson and Dolores Green of the RCFMC reported PFMC contacted them to negotiate a selling price for the San Bernardino panel. RCFMC would like to move forward in acquiring the network and feel SBCMS members would benefit by combining forces. They would like to work with SBCMS and PFMC to transfer the San Bernardino network into RCFMC. They are willing to change the name of the two-county network to Inland Empire Foundation for Medical Care. SBCMS would also be given representation on the RCFMC Board. SBCMS members should anticipate receiving revenue by seeing patients that are contracted in the FMC network. Drs. Wilson and Bangasser and Linda Stratton will meet with Ms. Green on November 26 to go forward with negotiations. RCFMC will meet with PFMC in early December.

CMA Trustee Doctor Dev Gnanadev updated the board on the status of the Medicare Pharmacy Bill. CMA supports the bill and will urge its members to call their representatives to press for its passage. The bill has been agreed to by the Conference Committee. The Senate and House will now vote on the bill the end of November. If it passes, we will have a new Medicare pharmacy program. The bill contains a $275 deductible, a 25% co-payment required from $275 to $2,200, and catastrophic coverage once the enrollee has spent $3,600 out of pocket in total. Beneficiaries will also have to pay a $35 per month premium. There will also be a drug discount card that adds about $600 of subsidy per year for low-income seniors. Some key provisions of the bill are a 1.5% physician fee increase for 2004 and 2005; a funded pharmaceutical drug benefit; removal of ICD-10 completely; and a move toward electronic prescribing. CMA also cited as pluses special funding for rural health care and medical training programs, as well as expanded preventive care for patients, and the creation of health savings accounts that can be coupled with high-deductible insurance programs to cover non-Medicare expenses.

Ms. Stratton reported CMA adopted a new CMA dues policy effective for the 2005 dues year. All component medical societies will now follow this new policy. Each medical society will be asked to make three independent choices with respect to providing dues discounts and/or administrative savings for new members, solo/small groups, and groups. The choices made by the component medical societies will determine the commissions that CMA pays on the timely provision of dues to CMA.

Dr. Gnanadev reported Doctor John Hill from Community Memorial Hospital in Ventura recently was honored with the Ventura Physician of the Year award. Dr. Hill hopes settlement discussions will proceed successfully, but there are some real sticking points with the hospital board that need to be dealt with. Another meeting with hospital representatives and attorneys has been scheduled. The doctors at Community Memorial Hospital are out a huge amount of money they have borrowed to fund their legal efforts, and the OMSS fund-raising for the hospital needs to continue to assist them finish this battle. This will be tricky, since CMA is now asking medical staffs to help raise funds for another important medical staff issue, the CPEC ER initiative effort. Dr. Gnanadev stated CMA has no reserves to fund the ER initiative. CMA is concentrating on ways to raise its portion ($900,000) of the monies needed for CPEC by the end of the year. The initiative sponsored by a coalition of hospitals, physicians, nurses, community clinics, and firefighters is to be placed on the November 2004 ballot to stabilized the emergency medical system in California. The initiative will perennially yield $200 million per year in new revenue for physician uncompensated care reimbursement for emergency room and on-call physicians. Dr. Sam Wilson presented an ER Initiative PowerPoint slide presentation. Members can request a copy of the slide presentation for medical staff presentations.

Treasurer, Dr. Clifford Walters reviewed the first quarter financial report for period ending September 30, 2003. Total revenue for the three-month period is $151,299.99 and total expenses including depreciation are $155,314.89. The board approved the financials as submitted.

IEHP Medical Director, Dr. Brad Gilbert, reported total membership is 269,670. Medi-Cal enrollment is 230,489 with 33,163 enrolled in the Healthy Families program. Healthy Kids enrollment for San Bernardino County is nearly 1,000. Riverside's Healthy Kids enrollment is 5,152. The auto assignment percentage in August was 30 percent.

The board approved Doctor Albert H. Arteaga as SBCMS' pediatric nominee for the 4th Annual Lights for Little Lives Top Doctor Award. Doctor Arteaga is President and CEO of LaSalle Medical Associates. Lights for Little Lives is an annual celebration of the wonder of children and renews the Unforgettables Foundation's commitment to ensuring that Inland Empire children are loved, valued, and protected.

The board appointed Dr. Linda Mason to be the District 4 (Loma Linda) representative on the SBCMS Board. Dr. Mason replaces Dr. Clifford Walters who moved to the Treasurer position. The board also approved Drs. Rodney Borger and Eric Frykman as representatives to CMA's Young Physician Section for the 2004 assembly.

Dr. Ernest Levister will be SBCMS' nominee for the CMA Foundation Robert D. Sparks Leadership Award. The award honors an individual or organization that demonstrates outstanding concern for the health of communities in a manner consistent with the mission of the CMA Foundation. Dr. Levister served as President of the J.W. Vines Medical Society, a component of the National Medical Association, from 1994 until 2001. He received SBCMS' 2003 Outstanding Contribution to the Community Award.

Dr. Wilson gave an overview of the CMA Leadership Academy held in La Quinta November 14-16. It was another successful and super-informative experience with 400+ attendees. Board members who attended agreed that CMA puts on an excellent program.

Dr. Gnanadev reported on the candidate interviews held November 3rd for the 62nd and 63rd Assembly districts. The Legislative Commission/Board of Directors endorsed David Pruitt for Assembly District 62 and Bill Emmerson, DDS for Assembly District 63. CALPAC will hold their candidates election committee in December 2003. During this meeting they will review all county medical society endorsements and CALPAC will then decide who they will support.