MEDPARTNERS: State Seizes Control of California Operations
In what the Los Angeles Times says "appears to be the largest single governmental seizure of an ailing health care company," the state Department of Corporations yesterday took over MedPartners Provider Network in a move to prevent the plan from shutting down without arrangements for patients' continuity of care (Bernstein/Kaplan, 3/12). The DOC appointed a conservator and filed a petition for the physician management group's reorganization under Chapter 11 of the federal bankruptcy code. "These drastic actions were required to preserve the stability and confidence in the delivery of health care for the people of the State of California, who enroll in health care service plans," according to a DOC notice sent to state health plans yesterday (Rundle, Wall Street Journal, 3/12). In the letter, Conservator Eugene Froelich promised that medical care at MedPartners clinics would continue without interruption. State Sen. Jackie Speier (D-San Mateo) said, "The Department of Corporations has shown courage and decisiveness in taking action to protect consumers in California, hundreds of thousands of [whom] may have had to immediately switch doctors if the situation had been allowed to continue." She added that in the wake of last year's bankruptcy of FPA Medical Management, "it is very important not to allow that situation to occur again" (Times, 3/12).
Mac Crawford, chair and CEO of parent company MedPartners Inc., said, "We believe the department's action is unwarranted. We believe we have met our obligations to support the plan and offered to continue to support the plan prior to the Department's precipitous action." MedPartners said the DOC led it to believe that the company was to continue to operate the plan and that it is currently consulting with legal advisors to determine what action the company can take against the department (release, 3/12). MedPartners spokesperson Robert Mead said to demonstrate its obligation to its California division despite plans to sell the network, the company drafted a formal letter Monday to the state promising to pay all costs associated with the clinics for at least 60 days (Times, 3/12).
For Sale Sign
In related news, MedPartners announced yesterday that it will sell Houston-based Kelsey-Seybold Medical Group to St. Luke's Episcopal Health System and Methodist Health Care System for $150 million cash (Sit-Duvall, Houston Chronicle, 3/11).