Decline in Membership Raises Concerns Among Creditors of Bankrupt Health Plan
Watts Health Foundation has lost more than 1,000 members per month since it filed for bankruptcy protection on May 31, raising concerns among its creditors about its prospects to continue operations, the Los Angeles Times reports.
Membership at the Inglewood-based not-for-profit HMO declined by about 30% this year prior to the filing. In addition, membership in WHF's UHP Healthcare plan has declined from more than 90,000 in May to 86,756 in early August, according to the Department of Managed Health Care.
The company currently is in negotiations to develop a bankruptcy reorganization plan, but future plans of the company and its divisions are unknown.
According to the Times, most WHF members are Medi-Cal or Medicare beneficiaries. WHF in 1987 filed for bankruptcy and was seized by state regulators in 2001.
Richard Diamond, a Los Angeles attorney representing the company's creditors committee, said the creditors "have some real concerns" about the membership decline, adding that the creditors "would like to see this company survive." Diamond added, "The creditors would like to see some direction about whether the company will reorganize or sell of some of its business -- sooner rather than later."
Gary Klausner, a Century City bankruptcy attorney representing WHF, said the decline in membership was not a consistent problem. "We're still operating, and we're still paying our expenses," he said, adding, "Our members are being cared for; no providers are refusing our members" (Vrana, Los Angeles Times, 8/23).