Assembly Examines Options to Prevent Physician Group Failures

In the wake of numerous recent medical group failures, Assembly Health Committee members yesterday examined measures aimed at bolstering the financial health of physician groups and preventing "patient upheaval" resulting from medical practice closures, the Sacramento Bee reports. Representatives from medical groups and health plans testified before the committee, offering their "take on the financial difficulties facing physician groups" and possible solutions. Physicians cite low payments from health plans and sinking capitation rates as the source of their financial woes and say that "insurers spend too much on administration and not enough on patient care." Health plans, however, say that "plans on average spend very little on administration and devote about 85% of every premium dollar to health care." Committee hearings were cut short yesterday due to an emergency energy crisis session. Patient advocates will likely offer testimony to the committee when the hearings, as yet unscheduled, resume. New regulations have already been implemented to monitor the financial status of physician groups, including a rule slated to take effect in May that requires medical groups to submit audited financial reports to the state's Department of Managed Health Care. Most recent among the medical group closures is the November bankruptcy of KPC Medical Management, which forced 250,000 patients to find new physicians (Rapaport, Sacramento Bee, 1/18).