FPA MEDICAL MANAGEMENT: Folds Northern California Operations
In a long-anticipated end to its financial tailspin, FPA Medical Management Inc. will pull out of Northern California this week, "shutting local doctors' offices and bailing out on Sacramento-area physicians who are owed more than $2 million." The Sacramento Business Journal reports that the San Diego-based physician management company filed Chapter 11 bankruptcy this summer, but only now has "formally cut ties with local doctors whose practices it bought from Foundation Health Corp. in 1996." In addition, the 27 physicians staffing FPA's six Sacramento-area clinics are scrambling to join other medical groups and recoup financial losses.
Time To Pay The Doctor
The California Medical Association estimates that losses for physicians throughout the state approach the $60 million mark -- payment the organization "plans to pursue." In its bankruptcy filing, FPA made no plans for repaying the doctors, but said it would extend to the physicians "warrants to buy future FPA stock." CMA spokesperson Hobie Swan charged, "They are trying to get out of their obligation to pay physicians in California and across the U.S. for work they've done and treatment they've provided." The state Department of Corporations is examining the payment issue, but how "the debts will shake out remains unclear." FPA was recently granted a 90-day extension "to revise its bankruptcy reorganization plan and solicit approval from creditors." A hearing in January "will confirm the reorganization plan."
Changes To Come?
Members of the health industry and the CMA indicated the problem will likely prompt policy changes. Swan said, "What happens with FPA sets a precedent. If physicians have to carry the burden for unpaid treatment, that puts them in an untenable position with their patients." The California Association of Health Plans has proposed that it "would require medical groups and independent practice associations that accept the risks of managed care to be more accountable for the money they receive." CAHP's Maureen O'Haren intimated that policy "alternations are in the works," saying, "It was a very general proposal, and this is a very complex issue" (Robertson, 11/9). Click FPA Medical Management to read past CHL coverage of the company.