SONOMA COUNTY: Grim Financial Forecast for Physician Groups
A $3 million debt forcing the disintegration of Specialty Physician Alliance, Sonoma County's largest specialty physician group, underscores the financial troubles plaguing medical practices in California, the Santa Rosa Press-Democrat reports. Nearly 90% of the 350 physician groups in the state "are in financial difficulty or even on the verge of bankruptcy," said Dr. Michael Ashcraft, a consultant on state Sen. Jackie Speier's (D-Dale City) state health insurance committee. These warnings prompted Speier to propose two bills -- SB 1224 and SB260 -- that call for the development of a watchdog agency to monitor the financial status of the state's medical groups and serve as an "early-warning system" to detect situations of financial concern. "Physician-group insolvency has become the biggest concern here and in the state," Ashcraft said, adding, "This is not unique -- it is happening throughout California." Managed care has forced specialists and primary care physicians to assume responsibility for managing health care costs and spread HMO enrollees' risk among practice groups, a task that has proved challenging to execute with financial success. Specialty Physician Alliance, a multispecialty group of 250 physicians that formed in 1997 when Health Plan of the Redwoods restructured, will close next week with only $300,000, leaving the company with a debt of $3 million owed to its specialists. The alliance's failure has left many of the physicians scrambling with "no hope of collecting tens of thousands of dollars owed them"; some specialists report their practices are being forced out of Sonoma County. Insufficient capitation rates, higher than anticipated drug costs and duplicative administrative costs triggered Specialty Physician Alliance's financial downfall (Rose, 8/24).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.