Dr. Andrew Watson has struggled for eight years to provide medical care to Applegate Valley residents in a house in Ruch that's been converted into a medical office.

Dedicated to the community he lives in, Watson provides charity care to patients who can't afford to pay or don't have insurance. One longtime patient showed his gratitude by giving Watson a cow. When the doctor's car broke down on Jacksonville Hill one day, two of his patients who had not been able to pay for medical care happened by and helped him out.

With malpractice premiums soaring, rural practices like Watson's have benefited from a state program that subsidizes rural doctors' malpractice insurance premiums, and helps them continue to practice in a highly competitive environment.

"Rural medicine is at the highest risk of failure," when compared to other kinds of medical practices, said Watson, who personally maintains the building he rents to cut down on costs. Rural practices "are the bellwether, or the canary in the mine, for the health of health care."

A review of the state program that subsidizes Watson reveals it hasn't lived up to its original goal in Jackson County.

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Of the 70 Jackson County doctors who received subsidies totaling more than $1 million locally over 18 months, 66 are in Ashland, three are in Rogue River and one (Watson) is in Ruch, according to information provided by SAIF Corp., which manages the program.

The $25 million program was approved under House Bill 3630 in 2003 to offset a portion of the escalating malpractice insurance costs faced by rural doctors.

Doctors can qualify for state assistance if their practice is 10 miles or more from a metropolitan community with a population of more than 30,000. Since the population of Ashland is 20,000, and it is just over 10 miles from Medford, doctors who practice there qualify for the program.

Rates of reimbursement vary among specialties. Obstetric physicians (those who deliver babies) get reimbursement for 80 percent of their premiums; family physicians receive 60 percent; and all other practices get 40 percent.

For example, one plastic surgeon, Dr. Scott Young of Ashland, received $21,048 from the state subsidy.

Sen. Alan Bates, D-Ashland, himself a physician, said he was surprised that so many Ashland doctors benefited from the program. Bates said he will work to change the legislation that gives Ashland doctors the ability to seek subsidies. The current law expires in 2007.

Some Ashland physicians have received as much as $50,000 to $60,000 over 18 months.

"From my point of view, Dr. Watson is representative of a rural physician," Bates said after learning about who gets the subsidy in Jackson County. "He's the kind of physician we're trying to support. Otherwise he might have to close his practice."

Bates does not qualify for the subsidy because he practices in Medford.

Rep. Peter Buckley, D-Ashland, who attended a House task force this week that discussed the program, said, "It's hard for us to make the case that Ashland is a rural town."

Buckley said momentum is building in Salem to increase to 15 miles the distance between a physician's office and a community of 30,000 people. That would effectively disqualify Ashland doctors from the program.

Despite the example of Ashland, Buckley and Bates said they think the program has mostly been a success. It has provided assistance to 1,400 doctors statewide.

Buckley said one doctor had been paying $100,000 annually in Tennessee for malpractice premiums, but when she moved to Pendleton she paid $15,000 thanks to the state subsidy.

Watson said his annual malpractice premium was $11,200, but he paid $4,400 after the state subsidy. Over 18 months he has received $9,696 from the program. He said he keeps his malpractice premiums relatively low by not performing high-risk procedures such as vasectomy.

Watson said that if he lost the subsidy, he would probably have to stop providing charity care at his clinic. He said decreasing Medicare reimbursements and increasing costs of providing good medical care are also putting the squeeze on rural physicians.

"There is a breaking point," he said.

Dr. John Maurer, an Ashland orthopedist who received $23,612, said there is a bigger issue than just whether Ashland doctors should receive the subsidy.

"It would have been more fair if every Medford orthopedist got the same thing," he said.

Maurer said the Legislature needs to control runaway malpractice premiums that are hurting physicians throughout the state. Medford's recent shortage of neurosurgeons, due in part to high malpractice premiums, is a prime indicator that something is wrong, he said.

Scott Ekblad, director of the Oregon Office of Rural Health, defended the subsidy for doctors in Ashland.

"It is still difficult more difficult to retain physicians in Ashland than it is in Portland," he said.

Ekblad said all doctors have seen their malpractice premiums rise in recent years.

"It is really becoming increasingly expensive and unaffordable to practice medicine in rural Oregon," he said.

Ekblad said that the program was set up to offer as much as $10 million annually to offset malpractice premiums, but has only been using about $5 million to $7 million annually.

Bates said he thinks high malpractice premiums are hurting physicians all over Oregon. He said if Ashland physicians were excluded from the subsidy, some might have to stop delivering babies or cut back their practice.

He said the program was designed to help rural doctors, not bail out doctors throughout the state.

"We haven't got that kind of money," he said.

Reach reporter Damian Mann at 776-4476 or dmann@mailtribune.com.

Local reimbursements

Taxpayer-funded insurance premium reimbursements paid to Jackson County doctors from Jan. 1, 2004, through Aug. 31, 2006

Ashland

Karen Harris $52,998

Cynthia Olson $61,608

Matthew Gooding $6,530

John Delgado $19,669

Jani Rollins $39,589

Leslie Stone $40,603

Miriam Soriano $54,197

Kathryn Henderson $7,947

Steven Thomas $ 4,288

Meredith Lowry $4,281

Laura Robin $2,188

David Hagie $16,302

Michael Thomas $4,878

Carl Osborn $12,676

Bruce Johnson $7,467

Clifford Hites $980

Jean Keevil $10,926

David Jones $8,703

John Barton $6,414

John Maurer $23,612

Thomas Ewald $11,282

Diane Williams $10,852

Gordon Enns $8,271

Allen Johnson $9,724

Gerald Lehrburger $15,375

David Snook $8,756

Andrew Kuzmitz $7,596

Craig Mather $6,060

Dee Christlieb $10,852

Douglas Morrison $28,619

William Epstein $11,431

Richard Morris $9,725

Paul Amstutz $33,078

Deborah Gordon $1,862

Paul Rostykus $16,423

Ted Sundin $3,591

Craig Chow $9,724

Hal Townsend $28,620

Sylvia Chatroux $11,802

Paul Hoffman $38,960

John Sager $14,069

Yvonne Fried $8,632

Robert Ewing, Jr. $11,431

Scott Young $21,048

Mark Greenberg $15,117

Philip Phillips $3,118

Alan Campbell $15,375

Robin Rose $10,578

Wendy Schilling $9,724

Debra Koutnik $5,974

Howard Morningstar $10,852

Michael Potter $20,442

Thomas Margulies $6,462

Garry Harris $1,678

Rudy Greene $7,636

Patrick Honsinger $7,470

Glen O'Sullivan $41,058

Peter Stone $9,373

David Childress $703

Robert Bade $3,554

D. Bradshaw-Walters $9,642

James Steinsiek $10,161

Bert Stewart $32,154

Douglas Diehl $13,130

Clifton Hebert $15,183

Dirk Woods $6,670

Shahrzad Sheibani $196

Rogue River

David Frank $10,800

Edmund Glovinsky $10,800

Doherty Gilchrist $1,854

Ruch

Andrew Watson $9,696

Total 1,013,034

Source: SAIF Corp., State of Oregon