KPC: HMO Agreement Staves Off Bankruptcy
Eight HMOs agreed on Friday to give financially troubled KPC Medical Management a $30 million package to prevent the Anaheim-based doctor's group from going bankrupt, the Orange County Register reports. Most of the money will come in the form of a loan from the HMOs, which also agreed to increase the monthly rates the "HMOs pay KPC to provide care for their members." KPC's owner and namesake, Kali P. Chaudhuri, also will contribute money to the package. He believes the money will allow KPC, which owes specialists, vendors and suppliers $25 million, to succeed financially. "If everybody keeps their commitments, we will be a very viable company in the future," he said. The California medical community's reaction to the news was mixed. Donna Cohen, co-owner of the Southbay Cancer Center in Lawndale, was "thrilled" that she would receive the roughly $400,000 that KPC owes the clinic. However, Mary Lu Palan of Palan Diagnostics in Yorba Linda feared the agreement could "totally put us under." She cited another $30 million loan that KPC received four months ago when Chaudhuri promised, and subsequently failed, to break even by July. Howard Saner, a vice president at Talbert Medical Group in Costa Mesa, said, "I'm not sure if it's enough, given the amount of the deficits I've heard about and the challenges his organization has inherited. ... But to me, it's a good sign that the health plans are truly working with all the parties to make this a success." Marcy Zwelling, a Long Beach doctor, thinks the deal will "embolden other troubled medical groups to step forward to ask the HMOs for more money." While it avoids bankruptcy for now, KPC still must face revenue lost from the pullout of 75,000 Cigna Healthcare of California and Blue Shield members from KPC clinics, as well as the resignation of 50 doctors in KPC's Mullikin clinic in Artesia, due to their concern about the quality of care (Wolfson, 8/12).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.