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PROSPECTUS SUPPLEMENT NO. 31 Filed pursuant to Rule 424(b)(3)
To the Prospectus dated January 24, 1997, Registration No.: 333-01926
As Supplemented to Date
1,548 Shares
of
Class B Common Stock of Doctors Health, Inc.
This Prospectus Supplement No. 31 relates to the issuance by Doctors
Health, Inc., a Delaware corporation ("Doctors Health") of 1,548 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 Dr. Marc A. Eisenbaum
("Physician"), and Doctors Health. This Prospectus Supplement should be read
in conjunction with the Prospectus dated January 24, 1997, the Prospectus
Supplement No. 26 dated August 29, 1997 which contains the Form of
Shareholders Letter and the Prospectus Supplement No. 29 dated October 1,
1997 which contains the Company's Annual Report on Form 10-K for 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.
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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.
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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 $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.
MARC A. EISENBAUM
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
$27,109.00 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 1,548 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 Marc
A. Eisenbaum
Annex B - Shareholders Letter, delivered to Physician as 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 Marc A. Eisenbaum, 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 $ 416,428.00.
2. The number of Physician's active (1) Medicare patients is 280.
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 $ 27,109.00.
2. 774 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.
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(1) Patients who have made at least one office visit to Physician during the
last two years.
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