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PROSPECTUS SUPPLEMENT NO. 23 Filed pursuant to Rule 424(b)(3)
To the Prospectus dated January 24, 1997, Registration No.: 333-01926
As Supplemented to Date
2,972 Shares
of
Class B Common Stock of Doctors Health, Inc.
This Prospectus Supplement No. 23 relates to the issuance by Doctors
Health, Inc., a Maryland corporation ("Doctors Health") of 2,972 shares of
its Class B Common Stock, par value $.01 per share (the "Class B Common
Stock") pursuant to the Primary Care Participation Agreement (the
"Participation Agreement") to be entered into between Annandale Family
Medicine, P.C. ("Physician"), and Doctors Health. This Prospectus Supplement
should be read in conjunction with the Prospectus dated January 24, 1997 and
the Prospectus Supplement No. 26 dated August 29, 1997 and Prospectus
Supplement No. 29 which contains the Company's Annual Report on Form 10-K for
the year ended June 30, 1997.
Doctors Health's principal executive office is located at 10451 Mill Run
Circle, Tenth Floor, Owings Mills, Maryland 21117, telephone number (410)
654-5800. IPA's principal executive office is located at 10451 Mill Run
Circle, Tenth Floor, Owings Mills, Maryland 21117 telephone number (410)
654-5800.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER OF
ANY PERSON TO EXCHANGE OR SELL, OR A SOLICITATION FROM ANY PERSON OF AN OFFER
TO EXCHANGE OR PURCHASE, THE SECURITIES OFFERED BY THIS PROSPECTUS
SUPPLEMENT, OR THE SOLICITATION OF A PROXY FROM ANY PERSON, IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT NOR ANY DISTRIBUTION OF
THE SECURITIES TO WHICH THIS PROSPECTUS SUPPLEMENT RELATES SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED THEREIN
IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________
See "Risk Factors" referred to on page S-2 hereof for certain information
that should be considered in connection with an investment in securities of
Doctors Health.
The date of this Prospectus Supplement is October 3, 1997.
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RISK FACTORS
Financial Performance of Doctors Health
Doctors Health has a limited operating history and for the fiscal years
ended June 30, 1996 and 1997 recorded a net loss of approximately $7.2
million and $16.2 million, respectively. There can be no assurance that
after the Closing Date Doctors Health will earn operating profits.
Risk Factors set forth in the Prospectus dated January 24, 1997
The Risk Factors set forth in the Prospectus are incorporated herein by
reference and should be read carefully by investors.
PROPOSED PRIMARY CARE PARTICIPATION AGREEMENT AMONG DOCTORS HEALTH AND DR.
EDWARD FREIDLER
The following description of the transactions contemplated by the
Participation Agreement does not purport to be complete and is qualified in
its entirety by reference to the Participation Agreement, a copy of which is
attached to this Prospectus Supplement as Annex A and is incorporated herein.
Physician is urged to read the Participation Agreement in its entirety.
General
Pursuant to the Participation Agreement, (i) Physician agrees to
participate in the managed care agreements that Doctors Health enters into
with Payors who have contracted with Doctors Health with respect to HMO
managed care products ("DOCTORS HEALTH HMO Plans"), (ii) Physician agrees to
provide eligible persons who elect to enroll in DOCTORS HEALTH HMO Plans
(each, a "DOCTORS HEALTH HMO Member") with those primary care services
customarily provided by primary care physicians, as may be required by the
DOCTORS HEALTH HMO Plans, (iii) Physician will be paid cash in the amount of
$13,007.73 upon execution of the Participation Agreement and satisfactory
completion of credentialling of Physician by DOCTORS HEALTH, and (iv) DOCTORS
HEALTH will issue to the Physician 2,972 shares of its Class B Common Stock.
Access to Doctors Health Services; Credentialling
Pursuant to the Participation Agreement, Doctors Health agrees to provide
to Physician, once Physician has 100 DOCTORS HEALTH Members in his medical
practice and at no cost to Physician, access to the managed care component of
Doctors Health's information system, which offers patient registration,
referral tracking and management and data management capabilities. Doctors
Health will also undertake to credential Physician, at no cost to Physician.
Pursuant to the Participation Agreement, Physician agrees to cooperate with
the Doctors Health credentialling and review process at no cost to Physician.
Exclusive IPA Arrangement
Pursuant to the Participation Agreement, Physician agrees to participate
in the managed care agreements that Doctors Health enters into with DOCTORS
HEALTH HMO Plans. Physician is required pursuant to the Participation
Agreement to cooperate with Doctors Health in accepting DOCTORS HEALTH HMO
Members under the DOCTORS HEALTH HMO Plans, and agrees not to participate or
contract with any other HMO or other payor offering managed care or other
risk-type plans directly or indirectly; provided, however, that if Doctors
Health chooses not to pursue a contract with an identified HMO or is unable
to negotiate such a contract within a commercially reasonable time period,
Physician shall be free to pursue a contract with the identified HMO.
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Capitation Rates; Bonus Pool
The Participation Agreement provides that DOCTORS HEALTH will determine
the commercial and Medicare primary care base capitation rates using their
good faith best efforts to reflect the prevailing market rate for the county
and city in which Physician provides covered services (the "Primary Care Base
Capitation Rates"). The Primary Care Base Capitation Rates may be adjusted
for age and sex of the DOCTORS HEALTH HMO members. The Primary Care Base
Capitation Rate shall be adjusted by an amount up to ten percent each based
upon (i) a formula for Commercial HMO Members taking into account certain
factors as capitation panel size, DOCTORS HEALTH membership growth, scheduled
office hours and service and medical care coordination considerations; and
(ii) a formula for Medicare HMO Members taking into account the number of HMO
Members served by Physician's medical practice. The Commercial and Medicare
formulas are set forth on Exhibit D-21 of the Participation Agreement. All
payments of the Primary Care Base Capitation Rates will be made by Doctors
Health directly to Physician, by the fifth day of the month for the prior
month's enrollment. Physician agrees pursuant to the Participation Agreement
not to seek or collect or accept any reimbursement from DOCTORS HEALTH HMO
Members or the DOCTORS HEALTH HMO Plans for any covered services provided to
DOCTORS HEALTH HMO Members, except for copayments and coinsurance.
The Participation Agreement also provides that Physician may participate
in a bonus pool established by Doctors Health's affiliated physicians. The
amount of bonus awards are determined according to Doctors Health's primary
care bonus system, rewarding high clinical quality, appropriate utilization,
patient satisfaction and retention and the extent of cooperation with other
participating physicians, and Doctors Health. Based upon these factors,
Physician may receive a bonus based upon the surplus generated in Physician's
panel of DOCTORS HEALTH HMO Members, after managed care expenses, up to a
maximum of 25% of all Primary Care Base Capitation payments received by
Physician that year or the limits provided by applicable health care
regulations. Bonus awards for a calendar year, if any, will be paid by April
of the following year. There can be no assurance that a bonus will be paid
in any given year or, if paid, as to the amount of any bonus. A copy of
Doctors Health's bonus system for primary care physicians is on file at the
offices of Doctors Health and will be made available at the request of
Physician.
Obligations of Physician
Pursuant to the Participation Agreement, Physician agrees to abide by and
comply with the relevant provisions of the agreements between Doctors Health
and the DOCTORS HEALTH HMO Plans. Doctors Health will provide Physician with
all relevant provisions that may apply to such Physician. In such
connection, the Participation Agreement provides that Physician shall work
cooperatively and in good faith with Doctors Health and the other Doctors
Health affiliated physicians providing services to the DOCTORS HEALTH HMO
members. Physicians are required to (i) prepare and maintain customary
medical records for services provided to DOCTORS HEALTH HMO Members and
provide Doctors Health with access to such records without charge, (ii)
comply with and accept the payment conditions of the Participation Agreement,
(iii) comply with managed care medical standards adopted by Doctors Health
affiliated physicians as part of the arrangements with the DOCTORS HEALTH HMO
Plans, and (iv) cooperate with Doctors Health's efforts to contact eligible
Medicare and adult medicine patients in Physician's practice, including
providing mailing lists and the use of Physician's name in correspondence,
and (v) sign and submit in a timely manner authorizations, consents,
encounter data and other forms adopted by Doctors Health.
Pursuant to the Participation Agreement, Physician will own and operate
all aspects of his medical practice and will remain responsible for all
operations of the medical practice, including all patient treatment decisions
and employee, office, lease and financial affairs. Doctors Health is not
engaged in the practice of medicine and will not interfere in any patient
treatment decisions. The
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Participation Agreement provides an agreement by Physician not to
differentiate or discriminate in the treatment of patients as to the quality
of services delivered because of race, sex, age, religion, place of
residence, health status or source of payment. Physician is required to make
arrangements for 24 hour seven day per week coverage to DOCTORS HEALTH HMO
Members through other primary care physicians who participate in the Doctors
Health provider network.
Doctors Health will provide to Physician a list of other physicians and
other health care providers who provide medical services in the Doctors
Health provider network. Other than in cases of a bona fide emergency, the
Participation Agreement requires Physician to utilize the Doctors Health
provider network when arranging for additional medical services required by
DOCTORS HEALTH HMO Members. Doctors Health may use Physician's name,
specialty, telephone number and business location in marketing, descriptive
and other information relating to the DOCTORS HEALTH HMO Plans. The
Participation Agreement provides that Physician may be precluded from
participating in a DOCTORS HEALTH HMO product by one of the DOCTORS HEALTH
HMO Plans. In such event, Doctors Health will notify Physician, in writing,
within 30 days of learning of such an action, and will assist Physician, if
requested, in seeking to overturn such an action.
Existing Primary Care Capitation Contracts
The Participation Agreement provides that if Physician is a party,
directly or indirectly, to any primary care capitation contract, Physician
must notify Doctors Health of such contract and must use his commercially
reasonable best efforts to assist Doctors Health in replacing such contract
with a DOCTORS HEALTH HMO Plan, provided that the payment terms of such
DOCTORS HEALTH HMO Plan are at or above the payment terms of such existing
contract.
Quality Assurance/Utilization Review Programs
Pursuant to the Participation Agreement, Physician will participate in
all utilization review, quality assurance and credentialling programs
operated by Doctors Health to assure or improve the quality and effective
utilization of health care services to the DOCTORS HEALTH HMO Members. In
such connection, Physician agrees (i) not to hold Doctors Health or any other
participants in such quality assurance/utilization review programs
responsible for reasonable recommendations made or actions taken in good
faith with respect to Physician, and (ii) to participate in all programs
developed by Doctors Health that are designed to resolve DOCTORS HEALTH HMO
Member grievances.
DOCTORS HEALTH Protocols
Pursuant to the Participation Agreement, Physician agrees to follow the
protocols and practice procedures which have been developed by Doctors
Health's affiliated physicians which are applicable to physician participants
in the Doctors Health provider network. In such connection, if Physician
should ever deem any aspect of such protocols to be medically inappropriate
or otherwise inappropriate for utilization, Physician may notify Doctors
Health in writing with sufficient specificity to enable Doctors Health to
respond to Physician's concerns.
Term; Termination
The Participation Agreement will terminate five years from its effective
date unless earlier terminated pursuant to its terms.
Doctors Health may terminate the Participation Agreement by notice in
writing to Physician (i) if Physician materially breaches the Participation
Agreement and such breach continues for 30 days after written notice is given
to Physician by Doctors Health specifying the
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nature of such breach, or (ii) for "good cause." The Participation Agreement
defines "good cause " to mean the occurrence of any one of the following: (a)
Physician's membership in any professional organization is terminated for
cause related to professional conduct, or Physician resigns from any
professional organizations under the threat of disciplinary action for
professional conduct, (b) Physician is indicted for a charge of committing a
felony or any misdemeanor involving moral turpitude, (c) Physician fails to
comply with rules, regulations and policies imposed with regard to Medicare
programs or fails to preserve his or her eligibility to participate in
Medicare programs, (d) physician fails to comply with any material Doctors
Health protocols, (e) Physician takes any action which puts a DOCTORS HEALTH
HMO Member's health at risk, or (f) Physician loses his or her license or
certificate to practice medicine.
Physician may terminate the Participation Agreement upon 90 days written
notice to Doctors Health if Doctors Health fails to perform its obligations
to Physician to pay any amounts required to be paid by Doctors Health to
Physician.
Maintenance of Liability Insurance
The Participation Agreement provides that Physician must maintain, at his
expense, general and professional liability insurance coverage of not less
than $1 million per claim and $3 million per year. Physician is required
pursuant to the Participation Agreement to provide Doctors Health with copies
of such policies or other evidence of compliance with such insurance
requirements and is required to notify Doctors Health of any changes or
cancellations to any such policy. In the event of a cancellation of a
policy, Physician is required to purchase an extension of coverage
endorsement within 10 days of written notice of discontinuance and must
provide Doctors Health with a copy of such endorsement. Pursuant to the
Participation Agreement, Physician must also notify Doctors Health promptly
when any patient of Physician files a claim or any notice of intent to
commence legal action alleging professional negligence against Physician, or
of the settlement of any such claim, or if a judgment is entered against
Physician in any such claim.
RESALE OF CLASS B COMMON STOCK
The shares of Class B Common Stock offered by this Prospectus Supplement
have been registered under the Securities Act of 1933, as amended. The
shares will be subject to the Stockholders Agreement attached hereto as Annex
B and therefore, will not be freely transferable. In addition, there is no
public market for the Class B Common Stock.
LEGAL MATTERS
The validity of the Class B Common Stock offered hereby have been passed
upon for the Company by Venable, Baetjer and Howard, LLP, Baltimore, Maryland.
ANNEXES
Annex A - Participation Agreement between Doctors Health, Inc. and
Annandale Family Practice, P.C.
Annex B - Shareholders Letter Agreement (Prospectus Supplement No. 26)
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ANNEX A
PRIMARY CARE PARTICIPATION AGREEMENT
1. This Participation Agreement is entered into on __________________,
1997 (the "Effective Date") by DOCTORS HEALTH, INC. ("DOCTORS
HEALTH") and the Physician whose name appears below.
2. DOCTORS HEALTH agrees to arrange for the provision of various
management, administrative and support services in connection with
managed care contracting, including contracting, marketing, care
management and information systems support. (For a description of
these services see Exhibit A-2 attached.)
3. Physician or the Physician's group practice entity, if the Physician
participates as a partner or employee of a group practice entity,
will be paid a Signing Bonus in part cash and part shares of DOCTORS
HEALTH Class B Common Stock, as set forth on Exhibit B-3 attached
hereto and made a part hereof. This payment will be made upon
execution of this Agreement, satisfactory credentialing of Physician
by DOCTORS HEALTH and provision of Physicians' financial statements
and Medicare patient list and is subject to modification to the
extent the information received by DOCTORS HEALTH differs from the
information provided on Exhibit B-3. This payment is made based
upon Physician's assurance to DOCTORS HEALTH that he/she is an
actively practicing primary care physician who intends to enter into
a cooperative relationship with other DOCTORS HEALTH affiliated
physicians to manage care to DOCTORS HEALTH HMO Members.
4. This Agreement will expire five (5) years from the Effective Date of
this Agreement (the "Term"), unless earlier terminated pursuant to
the terms hereof.
5. DOCTORS HEALTH agrees to provide Physician, once Physician has at
least 100 DOCTORS HEALTH Members, at no cost to the Physician,
access to the DOCTORS HEALTH Information System managed care
components, offering Enrollment, Eligibility, Referral Management
and Data Management capabilities.
6. Physician agrees to provide to eligible persons who elect to enroll
in an HMO managed care product offered by any Payor who has
contracted with DOCTORS HEALTH (the "DOCTORS HEALTH HMO Plans")
those primary care services customarily provided by primary care
physicians to eligible patients, as may be required by the DOCTORS
HEALTH HMO Plans. These patients are referred to in this Agreement
as the "DOCTORS HEALTH HMO Members".
7. DOCTORS HEALTH will credential Physician. Physician agrees to
cooperate with the DOCTORS HEALTH credentialing and review process,
all at no cost to Physician.
8. Physician agrees to participate in the managed care agreements that
DOCTORS HEALTH enters into with DOCTORS HEALTH HMO Plans. Physician
agrees to cooperate with DOCTORS HEALTH in accepting DOCTORS HEALTH
HMO Members under the DOCTORS HEALTH HMO Plans, and agrees not to
participate or contract with any other HMO or other payor offering
managed care or other risk type plans directly or through another
similar entity or other IPA. However, if DOCTORS HEALTH chooses not
to pursue a contract with an identified HMO or is unable to
negotiate such a contract within a commercially reasonable period,
Physician shall be free to pursue a contract with the identified HMO.
9. If Physician, as of the Effective Date, is a party (directly or
indirectly through another similar entity or IPA) to any primary
care capitation contract (each an "Existing Primary Care Capitation
Contract"), Physician agrees to notify DOCTORS HEALTH of such
Existing Primary Care Capitation Contract. Physician agrees to use
his or her commercially reasonable best efforts to assist DOCTORS
HEALTH in replacing such Existing Primary Care Capitation Contract
with a DOCTORS HEALTH HMO Plan, provided the payment terms to the
Physician under the DOCTORS HEALTH HMO Plan are at or above the
payment terms of the Existing Primary Care Capitation Contract.
Until DOCTORS HEALTH is able to replace the Existing Primary Care
Capitation Contract with a DOCTORS HEALTH HMO Plan, the
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Physician shall be free to renew the Existing Primary Care Capitation
Contract for additional one year terms.
10. Physician agrees to abide by and comply with the relevant provisions
of the agreements between DOCTORS HEALTH and the DOCTORS HEALTH HMO
Plans. DOCTORS HEALTH provide all relevant provisions that may
apply to Physician.
11. Physician agrees to work cooperatively and in good faith with
DOCTORS HEALTH and the other DOCTORS HEALTH affiliated physicians
providing services to the DOCTORS HEALTH HMO Members. To this end,
Physician will use all reasonable efforts to:
- Prepare and maintain customary medical records for services
provided to DOCTORS HEALTH HMO Members and provide the IPA with
access to such records without charge. DOCTORS HEALTH agrees that
all patient records will be treated as confidential and will
comply with laws and regulations related to confidentiality and
all ethical standards for physicians regarding the confidentiality
of patient records.
- Comply with and accept payment conditions of this Agreement.
- Comply with managed care medical standards adopted by DOCTORS
HEALTH affiliated physicians as part of arrangements with the
DOCTORS HEALTH HMO Plans.
- Cooperate with DOCTORS HEALTH' efforts to contact eligible
Medicare and adult medicine patients in Physician's practice,
including providing mailing lists and use of Physician's name in
correspondence.
- Sign and submit in a timely manner authorizations, consents,
encounter data and other forms adopted by DOCTORS HEALTH.
- Comply with DOCTORS HEALTH policies and guidelines which DOCTORS
HEALTH provides to physician.
12. Physician will participate in all utilization review, quality
assurance and credentialing programs operated by DOCTORS HEALTH and
the IPA to assure or improve the quality and effective utilization
of health care services to the IPA HMO Members ("QA/UR Programs").
Physician agrees not to hold DOCTORS HEALTH and other participants
in the QA/UR Programs responsible for any reasonable recommendations
made or actions taken in good faith with respect to Physician.
Physician will participate in all programs developed by DOCTORS
HEALTH that are designed to resolve DOCTORS HEALTH HMO Member
grievances.
13. Physician agrees not to differentiate or discriminate in the
treatment of patients as to the quality of services delivered to
DOCTORS HEALTH HMO Members because of race, sex, age, religion,
place of residence, health status or source of payment, and to
observe, protect and promote the rights of DOCTORS HEALTH HMO
Members as patients.
14. Physician will in good faith make arrangements, with the support of
Physician's assigned DOCTORS HEALTH representative, for twenty-four
hours, seven days a week coverage to DOCTORS HEALTH HMO Members
through other primary care physicians who participate in the DOCTORS
HEALTH provider network to the extent the DOCTORS HEALTH provider
network is adequate to provide such coverage in Physician's service
area.
15. Physician agrees to respond within seven (7) days of receipt to any
written inquiry from DOCTORS HEALTH regarding services provided to
DOCTORS HEALTH HMO Members or any other matters relating to this
Agreement, subject to all laws regarding the confidentiality of
medical records,.
16. DOCTORS HEALTH will provide to Physician a list of other physicians
and other health care providers who provide medical services in the
DOCTORS HEALTH provider network. Other than in cases of a bona-fide
medical emergency or where DOCTORS HEALTH and the Physician have
agreed the DOCTORS HEALTH provider network is insufficient,
Physician agrees to utilize the DOCTORS HEALTH provider network when
arranging for additional medical services required by DOCTORS HEALTH
HMO Members.
17. DOCTORS HEALTH' affiliated physicians have developed protocols and
practice procedures applicable to fellow physician participants in
the DOCTORS HEALTH provider network (the "DOCTORS HEALTH
Protocols"). Physician agrees to follow the DOCTORS HEALTH
Protocols when treating DOCTORS HEALTH HMO Members. If Physician
should ever deem
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any aspect of the DOCTORS HEALTH Protocols to be medically
inappropriate or otherwise inappropriate for utilization by
Physician, Physician may notify DOCTORS HEALTH in writing, with
sufficient specificity to enable DOCTORS HEALTH to respond to
Physician's concerns.
18. Physician will own and operate all aspects of his or her medical
practice and will remain responsible for all operations of the
medical practice, including all patient treatment decisions and
employee, office, lease and financial affairs. DOCTORS HEALTH is
not engaged in the practice of medicine and will not interfere in
any patient treatment decisions.
19. DOCTORS HEALTH may use Physician's name, specialty, telephone
number(s), and business location(s) in marketing, descriptive, and
other information relating to the DOCTORS HEALTH HMO Plans, and will
include Physician as a member of the DOCTORS HEALTH provider network
during this Agreement. Physician may nonetheless be precluded from
participating in a DOCTORS HEALTH HMO Product by one of the DOCTORS
HEALTH HMO Plans. In such an event, DOCTORS HEALTH will notify
Physician, in writing, within 30 days of learning of such an action,
and will assist Physician, if requested, in seeking to overturn such
an action.
20. During the calendar year 1997, DOCTORS HEALTH will pay to Physician,
and Physician agrees to accept from DOCTORS HEALTH as compensation
for all covered services provided by Physician to DOCTORS HEALTH HMO
Members the Primary Care Base Capitation Rates as shall be set forth
on Exhibit C-20 to be attached hereto and made a part hereof. For
calendar year 1998 and beyond, DOCTORS HEALTH shall establish in
cooperation with DOCTORS HEALTH participating primary care
physicians a Primary Care Base Capitation Rate that shall reflect at
least the prevailing market rate for the county or city in which the
Physician provides covered services.
21. The Primary Care Base Capitation Rates may be adjusted for age and
sex of the DOCTORS HEALTH HMO Members. The Primary Care Base
Capitation Rates will be increased by an amount up to ten percent
(10%) (the "Capitation Rate Modifier"), according to a Medicare and
Commercial formula established by DOCTORS HEALTH as set forth on
Exhibit D-21 attached hereto and made a part hereof.
22. Physician will, in addition to the Primary Care Capitation payment,
be paid on a fee for service basis for certain identified services
(as set forth on Exhibit E-22 attached) which are not considered
covered services according to the DOCTORS HEALTH fee schedule that
will be approximately equal to cost and less than alternative
specialist expenditures.
23. In order to provide economic incentives for Physicians to provide
the best possible health care to DOCTORS HEALTH HMO Members while
fostering efficiencies in utilization and quality assurance, DOCTORS
HEALTH' affiliated physicians have established, and Physician will
participate in, a bonus pool. The amount of bonus awards are
determined according to DOCTORS HEALTH' primary care bonus point
system, rewarding high clinical quality, appropriate utilization,
patient satisfaction and retention and the extent of cooperation
with other participating physicians DOCTORS HEALTH. Based upon this
system, DOCTORS HEALTH will fund a primary care physician bonus pool
which will be credited with 25% of the managed care surplus
remaining after deduction of the actual costs associated with the
provision of managed care services. The Physician will receive a
bonus based upon the net surplus in the bonus pool that is generated
in Physician's panel of DOCTORS HEALTH HMO Members up to the limits
permitted by applicable health care regulations. The Primary Care
Capitation Rates for any year are guaranteed and never charged or
offset for any losses. Losses are the sole responsibility of
DOCTORS HEALTH. Bonus Awards for calendar year 1996 will be paid by
DOCTORS HEALTH in April of 1997. Awards for calendar year 1997 will
be made in April of 1998 etc. (The DOCTORS HEALTH "Bonus Point
System" for Primary Care Physicians is set forth on Exhibit F-23
attached hereto and made a part hereof.)
24. All Payments of the Primary Care Capitation Rate will be made by
DOCTORS HEALTH directly to Physician, by the fifth business day of
each month for the prior month's enrollment. The Capitation Rate
Modifier will be calculated at the beginning of each quarter and
used to determine the following quarters' Primary Care Capitation
Rate. (For an illustration of the flow
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of the healthcare dollar and an example of the PCP compensation
model, see Exhibit G-24 and Exhibit H-24 (attached), respectively.)
25. Physician understands that DOCTORS HEALTH will be paid by the
DOCTORS HEALTH HMO Plans for all services provided by Physician to
DOCTORS HEALTH HMO Members.
26. Physician agrees not to bill or collect any reimbursement from
DOCTORS HEALTH HMO Members or the DOCTORS HEALTH HMO Plans unless
the service provided was not a covered service under the DOCTORS
HEALTH HMO Plan and the DOCTORS HEALTH HMO Member was given prior
written notice that the services would not be covered. However,
Physician may charge, bill, collect and keep from DOCTORS HEALTH HMO
Members any copayments or coinsurance. Physician agrees that,
whether or not there is any unresolved dispute for payment, under no
circumstances, including but not limited to nonpayment by DOCTORS
HEALTH or DOCTORS HEALTH insolvency, will Physician make any claims,
other than for copayments or coinsurance, against any DOCTORS HEALTH
HMO Member for covered services.
27. Physician will maintain, at his or her expense, general and
professional liability insurance coverage of not less than
$1,000,000 per claim and $3,000,000 per year. Physician will
provide DOCTORS HEALTH with copies of the policies or other evidence
of compliance with the insurance requirements. Physician will notify
DOCTORS HEALTH when any patient of Physician files a claim or any
notice of intent to commence legal action alleging professional
negligence against Physician or of the settlement of any such claim
by Physician or if a judgment is rendered against Physician in any
such legal action. Physician will promptly notify DOCTORS HEALTH in
writing of any changes in or cancellations of any policy of
insurance maintained by Physician. If such policy is written on a
claims made basis and such coverage is discontinued, Physician will
purchase an "Extension of Coverage Endorsement" within ten (10) days
of written notice of discontinuance and shall provide DOCTORS HEALTH
with a copy of this endorsement.
28. This Agreement may be terminated by Physician upon 90 days prior
written notice to DOCTORS HEALTH if DOCTORS HEALTH fails to perform
its obligations to Physician or to pay any amounts required to be
paid by DOCTORS HEALTH to Physician.
29. DOCTORS HEALTH may terminate this Agreement by notice in writing to
Physician for good cause, or if Physician materially breaches this
Agreement and such breach continues for a period of thirty (30) days
after written notice is given to Physician by DOCTORS HEALTH
specifying the nature of the breach. Good cause means:
- Physician's membership in any professional organization is
terminated for cause related to professional conduct, or
Physician resigns from any professional organizations under the
threat of disciplinary action for professional conduct.
- Physician is indicted upon a charge of committing a felony or
any misdemeanor involving moral turpitude.
- Physician fails to comply with rules, regulations and policies
imposed with regard to the Medicare programs or to preserve his
or her eligibility to participate in the Medicare programs.
- Physician fails to comply with any material DOCTORS HEALTH
Protocols.
- Physician takes any action which puts a DOCTORS HEALTH HMO
Members' health at risk.
- Physician loses his/her license or certificate to practice
medicine.
30. To the extent required to enable DOCTORS HEALTH and the IPA to
comply with Section 952 of the Medicare and Medicaid Amendments of
1980, or regulations promulgated pursuant thereto, Physician shall
until the expiration of four (4) years after the furnishing of
services under this Agreement, make available, upon written request,
to the Secretary of Health and Human Services or the Comptroller
General of the United States, or to any of their duly authorized
representatives, this Agreement and such of Physician's books,
documents and records as are necessary to certify the nature and
extent of costs under this Agreement.
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PRINTED NAME OF PHYSICIAN PHYSICIAN
_____________________________ By:_____________________________(SEAL)
Please Attach Business Card Edward Freidler, M.D.
DOCTORS HEALTH, INC.
By:_____________________________(SEAL)
Stewart B. Gold, President
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EXHIBIT A-2
Schedule of Services
I. Care Management includes:
A. Credentialing and Provider File Maintenance. In compliance with
NCQA standards, the credentialing process gathers information on
our member providers, performs primary source verification,
provides automatic recredentialing activities and alerts providers
when items need to be renewed and/or reevaluated.
B. Referral Management. The DOCTORS HEALTH Referral Management
Program provides for the maintenance of referral directories;
authorization of DOCTORS HEALTH referrals to network providers;
clinical review of referrals for appropriateness, according to
DOCTORS HEALTH physician approved criteria; and tracking and
reporting of referral patterns to identify outliers and
encourage recommendations for change.
C. Utilization Management. The DOCTORS HEALTH Utilization
Management Program reviews and tracks the utilization of
healthcare services, particularly inpatient stays, to facilitate
appropriate hospital admissions; provides recommendations for
alternate site care and assists with the coordination of these
services; provides clinical review of procedural necessity; and
works with the physician to identify practice pattern trends.
D. Case Management. The DOCTORS HEALTH Case Management Program
offers to physicians the skills of registered nurses and
licensed clinical social workers in order to assist in the
coordination of the care and services required by patients with
catastrophic and/or chronic illnesses or injuries. The case
manager works in conjunction with the physician, patient and
family to identify healthcare needs, develop a plan of care,
establish realistic treatment goals, coordinate and monitor
necessary resources, and evaluate treatment progress.
II. Data Management. The DOCTORS HEALTH Data Management service
coordinates the receipt and maintenance of payor eligibility and
benefit plan information. It also allows for the coordination and
integration of a variety of data components to yield meaningful
reports which will reflect the overall performance of a provider
network, i.e., utilization, costs and quality.
III. Patient Services. DOCTORS HEALTH provides all Participating
Physicians, access to nurse triage and patient advocacy services.
Through these services, specially trained nurses are available by
phone to answer questions regarding access to services, treatment
alternatives and self care options.
IV. Third Party Administration. The DOCTORS HEALTH Third Party
Administration services provide for the appropriate adjudication of
claims, coordination of benefits, subrogation services and
integration with the reinsurance carrier.
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EXHIBIT B-3
SIGNING BONUS
Physician's Signing Bonus is based upon the following representations
made by Physician:
1. Physician's gross primary care collections for the 1996 calendar year were
$ 442,125.00.
2. The number of Physician's active (1) Medicare patients is 287.
Based upon and subject to the accuracy of the information provided herein,
Physician's Signing Bonus shall be an amount equal to :
1. Cash in the amount of $ 13,007.73.
2. 373 shares of Class B Common Stock of Doctors Health.
A Prospectus describing Doctors Health and its affiliates is enclosed.
Please direct your attention to pages 8 to 16 of the Prospectus which
describes the risk factors which you should consider in evaluating an
investment in the securities offered under the Prospectus and in this
Agreement. We will provide updated information about this company in the
form of a Prospectus Supplement.
- - - ----------
1 Patients who have made at least one office visit to Physician during the
last two years.
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