THE SOUL OF AN HMO

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Dr. Hasan offers a contrite smile. "Maybe I should make it clearer to them how patently I am devoted to those centers of excellence." And by the way, he notes, "it was a Lincoln Town Car."

Nonetheless, within two months of Dr. Hasan's meeting, depositions taken in the deMeurerses' legal battle against Health Net would raise the question, Just how much power does the company truly possess? In the new medicine, can a big HMO dictate medical decisions even at an institution as lofty as UCLA?

When Dr. Glaspy met Christy for the first time on June 25, 1993, he found a woman in reasonably good physical shape, except for the fact that she was dying of breast cancer. The deMeurerses, in turn, saw Dr. Glaspy as warm, confident and low key, and--unlike Dr. McMillan at Scripps--open with information.

Dr. Glaspy, still unaware that Christy was a Health Net subscriber, agreed that a transplant was an option. If she wanted it, he said, she could have it. "In the part of medicine where there are uncertainties," Dr. Glaspy says, "I think we have a sacred responsibility to explain those uncertainties to patients, and we also should allow them to use their values and where they're coming from to pick among the treatment options that are rational." He could not wholeheartedly recommend a transplant in her case, he says, but a transplant "was on the rational list." First, however, she had to undergo the initial chemotherapy to test the responsiveness of her cancer. Dr. Schinke, using drugs recommended by Dr. Glaspy, began the cycle.

By now the deMeurerses had hired an attorney, Mark Hiepler, then preparing for trial against Health Net on behalf of his client Nelene Fox--his sister. For the deMeurerses, he mailed a detailed appeal to Health Net urging the company to reconsider its denial and presenting evidence that the treatment was widely accepted by cancer experts.

The appeal wound up on the desk of Dr. Ossorio, who again denied coverage. The deMeurerses, committed now to getting the transplant by any means necessary, launched a two-pronged attack: they authorized Hiepler to pursue an injunction to compel Health Net to pay for the treatment: and they began fund raising in earnest. Christy's sister organized a formal dinner in Boulder, Colorado; friends and colleagues arranged a school talent show. The deMeurerses' daughter Michelle, then eight years old, took a piece of loose-leaf paper and with shaky precision wrote her own advertisement for a yard sale. The sign said, MONEY GOES TO A MOTHER WITH BREAST CANCER.

On Aug. 28, Health Net's Greaves and QualMed's Hasan formally agreed to merge their companies. The merger triggered a "termination agreement" under which Greaves would receive a lump-sum payment of $1.1 million because technically he had been terminated from his former positions--even though he became cochairman and co-chief executive of the parent of the merged companies, Health Systems International, a job that paid a base salary of $865,000. "I gave up my sole authority as president, chairman and ceo," says Greaves, "and my contract said if that happens you get paid out your contract. So as any businessman would--anybody would--I exercised my rights." In 1994, when the merger took effect, his income, including the termination payment, bonuses and base salary, would total $3.2 million.