CEDING RISK: Brown & Toland Surrenders Knox Keene License
In the face of pressure from the state to surrender its Knox Keene license, San Francisco-based Brown & Toland Medical Group, which represents "2,000 of the most highly lauded doctors in the Bay Area" serving 260,000 patients, has abandoned its effort to oversee payments to hospitals. Last year, Brown & Toland lost $9.8 million, leading the company to cut 11% of its 300 administrative positions and to consolidate offices. It finished the year $469,708 ahead. However, Brown & Toland President and Chair Dr. Michael Abel said, "Obviously the financial implications of last year caught the attention of the department, which is why we looked at a turnaround plan." As part of that plan, the group informed the Department of Corporations that it can "no longer afford to pay the $200,000 or so per year to cover the [Knox Keene] fee and the cost of administering it." Although the group will no longer assume risk for hospital payments, Abel and state officials noted that services will remain unchanged. Abel added, "Three years ago it was a different market. The economic performance of the organization was better, and the opportunity to consolidate and grow was greater than it is now" - - a view corroborated by health care attorney Regina Boyle, who noted that three in four medical groups in California are nearly insolvent (Bole, San Francisco Business Times, 7/5 issue).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.