KPC: Medical Group Finalizes $30M Bailout
Financially ailing KPC Medical Management announced yesterday that it has received a $30 million bailout loan from eight HMOs, the Orange County Register reports. The deal will allow KPC to pay the estimated $30 million that the group owes specialists and vendors, many of whom have not been paid for services since the beginning of the year and have threatened to end their contracts with the group. Although the bailout deal was first announced Aug. 11, many creditors were skeptical that KPC would ever pay its "mountain of overdue bills." However, a "key element" of the deal is the hiring of Long Beach consultant Meg O'Toole as an "independent monitor" who will oversee "all disbursements to KPC's creditors." KPC CEO Kali Chaudhuri said O'Toole was hired because "there is a lot of distrust ... people are very jittery." The move satisfied Los Alamitos anesthesiologist Howard Rosen, who said, "I just heard today that we're definitely going to get paid tomorrow. I've heard that before, but this time I believe it." Pleased with the deal, Chaudhuri said, "We got what we asked for, and we feel we have a really good future." He added that KPC contributed money to the agreement, as did Caremark Rx, formerly known as MedPartners Inc., which sold its clinics to KPC last year but still holds a financial interest in the company. Still, KPC, which serves 400,000 patients in Southern California, "faces major hurdles," as many doctors would like to leave the group (Wolfson, 9/15). Although pleased with the deal, the California Medical Association called the bailout a "piecemeal solution" (Bernstein, Los Angeles Times, 9/15). CMA President Jack Lewin said, "Now we have a job in California to keep this from happening again with other medical groups, and with [KPC]. This is an intolerable set of circumstances for everybody involved" (Orange County Register, 9/15).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.