<PAGE>
PROSPECTUS SUPPLEMENT NO. 71 Filed pursuant to Rule 424(b)(3)
To the Prospectus dated January 5, 1998, Registration No.: 333-01926
As Supplemented to Date
11,500 Shares
of
Class B Common Stock of Doctors Health, Inc.
This Prospectus Supplement No. 71 relates to the issuance by
Doctors Health, Inc., a Maryland corporation ("Doctors Health") of 11,500
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 Bowie Internal Medicine
("Physician"), and Doctors Health. This Prospectus Supplement should be read
in conjunction with the Prospectus dated January 5, 1998, the Prospectus
Supplement No. 26 (Shareholders Letter Agreement), and the Prospectus
Supplement No. 62 which contains the Company's Quarterly Report on Form 10-Q
for the period ended December 31, 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.
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 March 13, 1998.
<PAGE>
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. Doctors Health is likely to record a net loss
for the fiscal year ending June 30, 1997. 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 5, 1998
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
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
$86,250 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 11,500 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.
S-2
<PAGE>
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 Participation Agreement provides an
agreement by Physician not to differentiate or discriminate in
S-3
<PAGE>
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 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
S-4
<PAGE>
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 Bowie Internal Medicine.
Annex B - Shareholders Letter Agreement, delivered to Physician
as Prospectus Supplement No. 26.
Annex C - Quarterly Report for the Quarter Ended December 31,
1997, delivered to Physician as Prospectus Supplement No. 62.
S-5
<PAGE>
PRIMARY CARE PARTICIPATION AGREEMENT
1. This Participation Agreement is entered into on __________________, 1997
(the "Effective Date") by DOCTORS HEALTH, INC. ("DH") and the Physician
whose name appears below.
2. DH 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 DH 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 DH and provision
of Physicians' financial statements and Medicare patient list and is
subject to modification to the extent the information received by DH
differs from the information provided on Exhibit B-3. This payment is
made based upon Physician's assurance to DH that he/she is an actively
practicing primary care physician who intends to enter into a
cooperative relationship with other DH affiliated physicians to manage
care to DH 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. DH agrees to provide Physician, once Physician has at least 100 DH HMO
Members, at no cost to the Physician, access to the DH 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 DH (the "DH HMO Plans") those primary care services
customarily provided by primary care physicians to eligible patients,
as may be required by the DH HMO Plans. These patients are referred to
in this Agreement as the "DH HMO Members".
7. DH will credential Physician. Physician agrees to cooperate with the DH
credentialing and review process, all at no cost to Physician.
8. Physician agrees to participate in the managed care agreements that DH
enters into with DH HMO Plans. Physician agrees to cooperate with DH
in accepting DH HMO Members under the DH 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 DH 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 DH of such Existing Primary Care
Capitation Contract. Physician agrees to use his or her commercially
reasonable best efforts to assist DH in replacing such Existing Primary
Care Capitation Contract with a DH HMO Plan, provided the payment terms
to the Physician under the DH HMO Plan are at or above the payment
terms of the Existing Primary Care Capitation Contract. Until DH is
able to replace the Existing Primary Care Capitation Contract with a DH
HMO Plan, the 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 DH and the DH HMO Plans. DH agrees to provide
all relevant provisions that may apply to Physician.
11. Physician agrees to work cooperatively and in good faith with DH and the
other DH affiliated physicians providing services to the DH HMO Members.
To this end, Physician will use all reasonable efforts to:
- Prepare and maintain customary medical records for services
provided to DH HMO Members and provide the IPA with access to
such records without charge. DH 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 DH
affiliated physicians as part of arrangements with the DH HMO Plans.
- Cooperate with DH' 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 DH.
<PAGE>
- Comply with DH policies and guidelines which DH provides to
physician.
12. Physician will participate in all utilization review, quality assurance
and credentialing programs operated by DH 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 DH 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 DH
that are designed to resolve DH HMO Member grievances.
13. Physician agrees not to differentiate or discriminate in the treatment of
patients as to the quality of services delivered to DH 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 DH HMO
Members as patients.
14. Physician will in good faith make arrangements, with the support of
Physician's assigned DH representative, for twenty-four hours, seven days
a week coverage to DH HMO Members through other primary care physicians
who participate in the DH provider network to the extent the DH 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 DH regarding services provided to DH HMO Members
or any other matters relating to this Agreement, subject to all laws
regarding the confidentiality of medical records,.
16. DH will provide to Physician a list of other physicians and other health
care providers who provide medical services in the DH provider network.
Other than in cases of a bona-fide medical emergency or where DH and the
Physician have agreed the DH provider network is insufficient, Physician
agrees to utilize the DH provider network when arranging for additional
medical services required by DH HMO Members.
17. DH' affiliated physicians have developed protocols and practice
procedures applicable to fellow physician participants in the DH provider
network (the "DH Protocols"). Physician agrees to follow the DH Protocols
when treating DH HMO Members. If Physician should ever deem any aspect of
the DH Protocols to be medically inappropriate or otherwise inappropriate
for utilization by Physician, Physician may notify DH in writing, with
sufficient specificity to enable DH 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. DH is not engaged in the practice of medicine and will
not interfere in any patient treatment decisions.
19. DH may use Physician's name, specialty, telephone number(s), and business
location(s) in marketing, descriptive, and other information relating to
the DH HMO Plans, and will include Physician as a member of the DH
provider network during this Agreement. Physician may nonetheless be
precluded from participating in a DH HMO Product by one of the DH HMO
Plans. In such an event, DH 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, DH will pay to Physician, and Physician
agrees to accept from DH as compensation for all covered services provided
by Physician to DH 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, DH shall establish in
cooperation with DH 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 DH 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
DH 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 which are
not considered covered services according to the DH 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 DH HMO Members while fostering efficiencies
in utilization and quality assurance, DH' affiliated physicians have
established, and Physician will participate in, a bonus pool. The amount
of bonus awards are determined according to DH' primary care bonus point
system, rewarding high clinical quality, appropriate utilization, patient
satisfaction and retention and the extent of cooperation with other
participating physicians DH. Based upon this system, DH will fund a
primary care physician bonus pool which will be credited with 25% of the
managed care surplus remaining after deduction of
2
<PAGE>
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 DH 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 DH. Bonus Awards
for calendar year 1996 will be paid by DH in April of 1997. Awards for
calendar year 1997 will be made in April of 1998 etc. (The DH "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 DH
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.
25. Physician understands that DH will be paid by the DH HMO Plans for all
services provided by Physician to DH HMO Members.
26. Physician agrees not to bill or collect any reimbursement from DH HMO
Members or the DH HMO Plans unless the service provided was not a covered
service under the DH HMO Plan and the DH HMO Member was given prior
written notice that the services would not be covered. However, Physician
may charge, bill, collect and keep from DH 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 DH or DH insolvency, will Physician make any
claims, other than for copayments or coinsurance, against any DH 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 DH with copies of the policies
or other evidence of compliance with the insurance requirements. Physician
will notify DH 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 DH 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 DH with a copy of this endorsement.
28. Each party shall indemnify, hold harmless and defend the other, its
officers, directors, employees, agents, successors and assigns, from and
against any liability, loss, damages, claim, cause of action, cost or
expense, including reasonable attorneys' fees, caused or asserted to have
been caused, directly or indirectly, by or as a result of the performance
or failure to perform its obligations under this Agreement.
29. This Agreement may be terminated by Physician upon 90 days prior written
notice to DH if DH fails to perform its obligations to Physician or to pay
any amounts required to be paid by DH to Physician.
30. DH 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 DH 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 DH Protocols.
- Physician takes any action which puts a DH HMO Members' health at
risk.
- Physician loses his/her license or certificate to practice
medicine.
31. To the extent required to enable DH 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.
3
<PAGE>
32. Notwithstanding termination of this Agreement for any reason, Physician
shall, at DH's request, continue treatment of any DH HMO Member, for
the shorter of such periods of time (i) as may be required by law, (ii)
required by a Benefit Plan, or (iii) until the medically required
course of treatment has been completed, and Physician shall be entitled
to payment hereunder for such purposes. Physician shall continue to
provide covered services for a period of thirty (30) days
notwithstanding the inability of DH or a Payor to pay amounts due
Physician, and Physician shall use its best efforts to assist in the
orderly transfer of such Members at DH's direction.
33. In the event that any state or federal laws or regulations, now
existing or enacted or promulgated after the effective date of this
Agreement, are interpreted by judicial decision, a regulatory agency or
legal counsel to either party in such a manner as to indicate that the
structure of this agreement may be in violation of such laws or
regulations, the parties shall amend this Agreement as necessary to
bring it into compliance with the law.
34. This Agreement shall be construed by and governed under the laws of the
State of Maryland.
35. DH shall have the right, upon giving prior written notice to Physician,
to assign its rights and obligations under this Agreement to a DH
Affiliate without the prior written consent of DH.
36. Notwithstanding anything in this Agreement to the contrary, Physician
shall have the right to terminate this Agreement after the second
anniversary of this Agreement in the event that Bowie Internal Medicine
("Bowie") enters into an agreement to merge or otherwise sell its
practice to another organization or entity and, in fact, consummates
such transaction; provided that Physician or Bowie provides DH with not
less than sixty (60) days' prior written notice of Bowie's intention to
enter into such agreement or transaction and to terminate this
Agreement, and upon the consummation of such transaction, Physician or
Bowie, as the case may be, shall return to Doctors Health a pro-rata
portion of the Signing Bonus (whether in cash or shares of DH stock)
paid hereunder.
IN WITNESS WHEREOF, this Agreement is entered into and executed as of the
date first written above.
PRINTED NAME OF PHYSICIAN PHYSICIAN
- ---------------------------- By:______________________________ (SEAL)
Please Attach Business Card M.D.
DOCTORS HEALTH, INC.
By:______________________________ (SEAL)
Name:____________________________
Title:___________________________
4
<PAGE>
EXHIBIT A-2
Schedule of Services
1. 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 DH Referral Management Program provides for
the maintenance of referral directories; authorization of DH referrals
to network providers; clinical review of referrals for
appropriateness, according to DH physician approved criteria; and
tracking and reporting of referral patterns to identify outliers and
encourage recommendations for change.
c. Utilization Management. The DH 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 DH 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.
2. Data Management. The DH 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.
3. Patient Services. DH 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.
4. Third Party Administration. The DH Third Party Administration services
provide for the appropriate adjudication of claims, coordination of
benefits, subrogation services and integration with the reinsurance
carrier.
5
<PAGE>
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
$ ___________.
2. The number of Physician's active(1) Medicare patients is _____.
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 $ ______________.
2. ____________ 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.
6
<PAGE>
EXHIBIT C-20
Doctors Health, Inc.
PCP Compensation
DH Capitation - Base Rates
1998 Primary Care Base Capitation Rates
Medicare
<TABLE>
<CAPTION>
County Aged/ Disabled Institutionalized
- ------ --------------- -----------------
<S> <C> <C>
Allegany $26.70 $52.06
Anne Arundel $36.00 $60.00
Baltimore $30.36 $59.19
Baltimore City $31.23 $60.00
Calverty $26.15 $50.99
Caroline $24.00 $46.80
Carroll $26.97 $52.58
Cecil $24.86 $48.48
Charles $31.16 $60.00
Dorchester $24.00 $46.80
Frederick $24.00 $46.80
Garrett $24.00 $46.80
Harford $29.45 $57.43
Howard $30.68 $59.82
Kent $24.00 $46.80
Montgomery $32.00 $60.00
Prince Georges $42.00 $60.00
Queen Anne $24.00 $46.80
St. Marys $26.34 $51.37
Somerset $24.00 $46.80
Talbot $24.00 $46.80
Washington $24.00 $46.80
Wicomico $24.00 $46.80
Worcester $24.00 $46.80
District of Columbia $35.00 $60.00
Northern Virginia
</TABLE>
7
<PAGE>
EXHIBIT D-21
DH Capitation - Capitation Rate Modifier ("CRM")
(up to 10% of Base Rate)
Commercial Formula
<TABLE>
<CAPTION>
CRM
Percentage
----------
<S> <C>
I. Capitation Panel Size
- > 100 members/doctor or 200 members/practice 0.5%
- > 300 members/doctor or 750 members/practice 1.5%
- > 500 members/doctor or 1,250 members/practice 2.5%
- > 1,000 members/doctor or 2,500 members/practice 3.5%
II. DH Membership Growth
- Membership growth > 10% per year (min. = 100 patients) 1.25%
- Membership growth > 20% per year (min. = 250 patients) 2.50%
III. Scheduled Office Hours
- > 50 office hours per week 0.5%
- > 60 office hours per week 1.5%
- > 70 office hours per week 2.5%
IV. Internal Coverage 1.5%
- Coverage of the practice by its own physicians to
deliver better service and care coordination
Maximum CRM as a % of the Base Rate = 10.0%
</TABLE>
Medicare Formula
<TABLE>
<CAPTION>
Capitated Panel Size
<S> <C>
> 25 Medicare HMO Members/physician or 75 Medicare HMO Members/practice group 2.5%
>50 Medicare HMO Members/physician or 150 Medicare HMO Members/practice group 5.0%
>75 Medicare HMO Members/physician or 225 Medicare HMO Members/practice group 7.5%
>100 Medicare HMO Members/physician or 300 Medicare HMO Members/practice group 10.0%
Maximum CRM as a % of the Base Rate 10.0%
</TABLE>
THE FORMULAS PROVIDED ARE SUBJECT TO CHANGE BASED UPON CHANGES IN THE MARKET AND
RECOMMENDATIONS FROM PRIMARY CARE PHYSICIANS REPRESENTING EACH COUNT
8
<PAGE>
EXHIBIT E-23
Point System for the Bonus Pool Distribution
<TABLE>
<CAPTION>
Available
PCP
Points
----------
<S> <C>
I. Utilization
- Hospital 5.0
- Specialist 5.0
- Emergency room, other 5.0
II. Patient Satisfaction/Retention 2.5
- Based on results of annual surveys
III. Clinical Quality 2.5
- Chart reviews and outcomes
IV. "Citizenship" 5.0
- Overall DH cooperation and participation,
including network loyalty
MAXIMUM PCP BONUS POINTS = 25.0
</TABLE>
9
