State to Investigate Financially Ailing Medical Group
State regulators have launched an investigation of the financially ailing medical group
KPC Medical Management, after KPC officials announced that the group faces a $20 million shortfall, the Los Angeles Times reports. KPC's announcement comes just two months after it received a $30 million
bailout from health plans. Citing late or reduced payments from health plans and the failure of other debtors to pay KPC for services, KPC President Donald Smallwood said that KPC was again forced to delay payments to specialists. Smallwood noted that KPC also is monitoring expenditures for clinic supplies very closely. One physician at a large South Bay clinic alleged that the facility was down to its last tank of oxygen, and clinic physicians were twice forced to send patients to a nearby emergency room because the facility ran out of X-ray developer. Smallwood said, "We're running things very tight. We don't have a lot of surplus." Although state regulators lack legal authority over medical groups such as KPC, the state intends to dispatch an investigator to several KPC clinics this week by using a "back door provision" in state law that allows regulators to investigate medical groups that contract with HMOs, according to Department of Managed Health Care Director Daniel Zingale. Even if the investigator finds fault with KPC, the department still lacks the authority to take action against the medical group, lead regulator Joy Higa said. However, Higa noted that the DMHC can attempt to persuade health plans to "change the way they do business with the group." On Tuesday, regulators held a conference call with several health plans to determine contingency plans for patients, in the event that KPC fails or begins to provide "substandard care." DMHC also expressed concerns over reports that KPC will close several clinics, forcing some patients to travel more than 30 miles to see doctors. Smallwood conceded that the group intends to close several clinics in the Long Beach/Artesia and Inland Empire areas, but indicated that patients would be able to choose from clinics between 5 and 10 miles away (Bernstein, Los Angeles Times, 11/8).