A teen-age boy’s one-day visit to San Diego in 1977 led to the establishment here of the nation’s first — and largest — health plan for complementary and alternative medicine. In the early days, accredited chiropractic treatment was made available through employers or their health plans or HMOs. Then came acupuncture, Chinese herbal medicine, naturopathy, massage and dietetics and nutrition. Just added: guided imagery as preparation for surgery and labor and delivery, diet and weight control and controlling and living with arthritis, hypertension and other conditions, including one specifically for post-9/11 stress reduction.

George Thomas DeVries III, chairman, president and CEO of American Specialty Health Inc., founded the company in 1987, when he was 28. With $5,000 in savings and an employed wife of six months supporting the household, DeVries worked alone, nearly around the clock, to make a reality of his vision of providing direct-access managed nontraditional care.

Now, after 14 years, projected revenue for 2001 is $107 million for American Specialty Health and what is called its “family of companies,” wholly owned subsidiaries American Specialty Health Plans, American Specialty Health Networks and Healthyroads Inc., originally called American Specialty Health & Wellness.

For more than a year and a half, the businesses, and their 540 or so employees, all have been housed in a prominent Downtown landmark still informally known as the Paladion, at 777 Front St. Now named Front Street Plaza, the four-story building on Front Street, between G and F streets, originally was home to numerous upscale retail businesses, including Tiffany’s, Gucci, Cartier’s and Versace.

Midwest Beginnings

DeVries, an Iowa native, had just graduated from Culver Military Academy in Culver, Ind., and had been accepted at the University of North Carolina at Chapel Hill, when he took a 72-hour Greyhound bus trip to visit a friend in Malibu. He traveled to San Diego, spent a day and knew immediately he wanted to live here.

“I went back home and worked two jobs and saved money,” he says, canceling UNC and applying at UCSD, where he earned a psychology degree in 1984. His interest in business and health merged when he took a job with Onsite Health Care, an Orange County mobile dental and eye care service that catered to the elderly, especially those in convalescent and long-term care homes.

“I became regional manager,” he recalls, “and then the business was sold and I was laid off.” While his wife, Jan, supported them, DeVries intended to become a partner in a health care company in the midwest. That company became American Specialty Health, and the other partners were soon out of the picture.

DeVries envisioned a new concept in health care when he learned, to his surprise, that chiropractic treatment was not covered by HMOs in California. “I thought, ‘All those consumers can’t be wrong.’ Chiropractic had a good reputation; it made sense.” That led him to see the possibility for providing chiropractic and other nontraditional health care alternatives for workers through their health plans or employers.

A Hard Sell

He began going to various health plans suggesting the addition of chiropractic. Since most health plans focused on traditional medicine, he says, “It was a hard sell.” The first two years, he worked alone, processing claims, writing sales proposals, answering telephone calls. “I literally did everything,” he recalls. He finally hired his first staff person in 1989, and by 1990 had a payroll of four.

“When we first started,” he says, “I worked 80 hours a week.” The pace was so hectic, he even lived in the Marriott Hotel in Mission Valley for a month while he was getting started to save the commute time to his Orange County home. Until last year when the Downtown building was ready for occupancy, ASH business was conducted in 40 separate offices in four buildings in Mission Valley.

The business has mushroomed since those early years, now providing services for more than 5.8 million members through more than 100 health plans and 19,000 providers in all 50 states. In California alone, ASHP contracts with nine of the state’s 10 largest health plans covering more than 3.7 million members. Among the plans ASH contracts with are Aetna/U.S. HealthCare; Blue Shield of California; Blue Cross of California; Health Net; Kaiser Permanente of Hawaii, the Midatlantic and Ohio; PacificCare of Arizona and Nevada; Prudential; and Trigon Blue Cross Blue Shield.

The company received the nation’s first chiropractic health plan license in 1994, the nation’s first acupuncture health plan license in 1997, and the nation’s first health plan accreditation for chiropractic and acupuncture in 1998.

Increasing Services

Complementary health services now include acupuncture and traditional Chinese herbal supplements; naturopathy, the practice of natural healing; massage; dietetics or nutrition, guided imagery, which includes such topics as preparation for surgery, labor and delivery, achieving weight control, coping with arthritis, hypertension or other conditions.

In addition, Healthyroads.com is an e-health site with a directory of complementary health care providers nationwide, information on complementary and alternative medicine, and a source for more than 3,000 health and wellness products. And the company recently reached an agreement to buy Diversified Life Insurance Co. in Illinois.

“This is a most significant step,” says DeVries, “which will allow us to be able to contract directly with employers in 40 more states.”

The company has grown predominantly through employer-driven plans, DeVries says. Those plans provide access to providers for employees who can seek treatment and pay a discounted rate. American Specialty Health contracts with employers, as well as HMOs or health plans, but most commonly ASH contracts with health plans and HMOs. Frequently an employer will first provide access to complementary services, which are later offered through that company’s health care plan or HMO.

But as in life, not all has been perfect in ASH-land.

In July, the California Chiropractic Association sued the American Specialty Health Plans, saying the company’s business practices interfere with patients seeking and chiropractors providing treatment. The suit worries DeVries, who says, “A lawsuit is never good. But I see no merit in it and we will defend it and we expect to prevail.”

Since ASH is a publicly regulated entity, DeVries says all the issues are public information and he encourages discussion. One issue is that of managed care, which in ASHP’s case, means after four visits by the same patient, the treating chiropractor must submit for review a treatment plan for continued coverage.

ASHP pays per visit, rather than capitate, or prepay a participating chiropractor a fixed amount per patient covered by the health plan. After four visits, a proposed treatment schedule is reviewed on a professional basis by a committee of chiropractors. Of cases where that occurs, DeVries says, two thirds are approved and the remainder are partially approved.

Pay is another issue raised by the CCA in its lawsuit. “The payment for services is low,” DeVries agrees, “but the rates are competitive with other state plans.” Of the state’s 12,000 licensed chiropractors, DeVries says, 2,000, or about 15 percent, are members of the California association.

Rebecca Downing, executive director of the California Chiropractic Association, says the contract makes it difficult for chiropractors to practice as they deem necessary because of the review after four visits. She did not have figures, but says “Doctors are calling and telling us this.”

The pay concern, she says, is that payments vary widely from one organization to another, and are below the cost of overhead for seeing a patient, and below other plans such as and including Medicare.

“The whole contract is not negotiable, and the fee has been reduced for the last couple of years,” she says. “A doctor could choose not to renew only theoretically. ASHP has all the power.”

Need Is Apparent

The need for complementary services is apparent to DeVries by the phenomenal growth of his company, and also through research. For two years, his company partnered with Stanford University to study complementary health care.

“If someone uses complementary services,” he says, “and 40 percent to 50 percent of Americans do each year, most will use more than one form.” American Specialty Health uses only providers licensed through their state boards. Interested providers apply, are evaluated and credentialed. Even American Specialty Health itself has had to be licensed in California as an HMO since 1992.

Connie Martin, insurance benefits specialist for Grossmont School District, says employees in her district use chiropractic and even acupuncture services in growing numbers. They have access to those services without a referral from a physician. Employees under Grossmont’s plan have 40 visits a year they can use on a co-pay basis.

“I believe in it, and I use it regularly,” she says of chiropractic treatment. Others who have used acupuncture, “which seemed a little out there at first,” Martin says, have been satisfied. “It has been a nice addition to the plan. ”In the years since ASH was launched, George and Jan DeVries have moved to Rancho Santa Fe and have had four children. He says work and family keep him too busy for other involvements, but when he enumerates other activities, it is clear he makes the time. He continues to serve on the White House Commission on Complementary and Alternative Medicine Policy, to which he was appointed by President Clinton. As a commission member he has testified before various congressional and legislative committees.

One involvement that excites him is his work with Impact Urban America, a nonprofit inner city organization that strives to find temporary fulltime employment for unemployed persons. DeVries himself provided jobs for 11 temporary employees, and eight of them were later hired for full-time positions. “We provide training in how to work in the corporate environment,” he says, noting that he will chair a future fund-raiser.

He serves on the board of the American Association of Preferred Provider Organizations; the editorial board of the Alternative Medicine Business News; the Health Committee of the San Diego Area Greater Chamber of Commerce; the board of the California Association of Naturopathic Physicians; and is a member of the San Diego Children’s Hospital Foundation Corporate and Community Development Committee; the Adaptive Business Leaders Organization; the UCSD Chancellor’s Associates; the American Management Association International; The California Association of Health Plans; and the HealthLink Steering Committee of San Diego Public Schools. He was named 2000 National Ernst & Young Entrepreneur of the Year in Health Sciences; San Diego Entrepreneur of the Year in Health Sciences for 1997; Outstanding Alumnus of the University of California at San Diego.

Although DeVries works many hours a week and travels often in his position, his main pleasure, he says, is his family. “I really enjoy my kids,” says this dad, who is just like other dads, watching three children on swim teams, coaching soccer and taking family vacations, like a recent white water rafting excursion in Oregon.

He has come a long way from the days of working alone around the clock to build the business. But even while he enjoys recreation, DeVries always is conscious of emerging complementary services that may benefit consumers.