MEDPARTNERS: Seeks to Disengage from California Takeover
Attempting to assuage worried investors, Birmingham-based MedPartners Inc. yesterday sought to distance itself from MedPartners Provider Network Inc. after state regulators seized control of the California operation late last week (Bernstein, Los Angeles Times, 3/16). The parent company said it "has no legal obligation to fund the operating losses" of the provider network and emphasized that only the California network is part of bankruptcy proceedings (MedPartners release, 3/15). MedPartners "stopped short of saying it would withhold funds from its California operations." According to sources familiar with the situation, MedPartners may agree to fund some ongoing losses of the California operations under a sale agreement, but many suitors and investors have been scared off. In another attempt to disassociate itself from the California plan in particular and the "collapsing business" of physician practice management in general, the Times reports that MedPartners may change its name.
State conservator Eugene Froelich "reiterated that patient care would not be interrupted by the state's takeover," and said that with "proper guidance the operations can become profitable again" (3/16). The American Medical Association commended California's "quick and decisive" move to "assure that neither patient care nor physician financial stability will be threatened," calling the provider network "another casualty of this dangerous national trend toward consolidation" (AMA release, 3/12). California regulators are holding a public meeting on the takeover today in downtown Los Angeles (Times, 3/16).