KPC GLOBAL CARE: Medical Group Nears Bankruptcy
KPC Global Care, the giant medical practice group once owned by MedPartners Inc., could go under within two to four months unless contracting health plans increase their monthly payments, according to owner Dr. Kali Chauduri. Just nine months after Chauduri bought most of the assets of the near-bankrupt MedPartners, he said KPC is losing $2 million a month and could be forced to disrupt care for about a half-million patients statewide. The medical group already has delayed payments to some doctors and medical suppliers. State regulators say there is little they can do to remedy the situation. While MedPartners was both a medical practice and an insurer, KPC operates only as a medical group, and "under current state law, [officials] are not allowed to intervene in troubled medical practices," the Los Angeles Times reports. Speaking on the condition of anonymity, one high-ranking state source said, "KPC now has bought these entities, and whether it was a good deal or a bad deal, it wasn't the state's role (to determine). It's a business, and businesses are allowed to fail. We can't step in on behalf of one physician group when there are so many others that are also in financial trouble." Once the newly created Department of Managed Care takes over regulation duties next month from the Department of Corporations, it will be authorized to ask some medical groups to prove financial solvency, but it could take up to two years to establish a specific mechanism to regulate them. Officials will only be able to regulate most medical practices indirectly, as the new standards will apply only to groups licensed to sell insurance, although regulators can pressure health plans to contract only with financially healthy groups. Health care consumer advocate Jamie Court decried the situation: "No one is watching. And that's a blank check to every financially troubled physicians groups that wants to cheat. The state is turning a blind eye to patients being robbed of their money." Chauduri said KPC was losing up to $10 million a month when he took over, but consolidation, clinic closings and layoffs sharply reduced losses. If the medical group fails, he said doctors would have to contract with new clinics or HMOs and patients may be "unceremoniously" switched to unfamiliar doctors. Meanwhile, some doctors who have not received payment, are illegally billing patients. "We don't really expect for them to pay it. But it makes the patients mad to get the bills, and then they complain to KPC," one doctor said (Bernstein, 6/13).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.