KPC Medical to Receive $30 Million in Bailout
KPC Medical Management, the struggling medical clinics and physicians group once owned by MedPartners Inc., will receive about $30 million in cash, loans and debt relief in a bailout package hammered out Friday.
The deal was negotiated under pressure from state regulators as well as the threat of imminent bankruptcy for KPC. Most of the state’s health plans agreed to provide funds and to pay more each month for the care of the company’s 500,000 patients.
Dr. Kali Chaudhuri, who bought the clinics and physician practices from MedPartners after a portion of that company was taken over by state regulators and forced into bankruptcy last year, said the bailout will allow him to stay afloat indefinitely.
“If everyone keeps their promise, not only will we break even, we will do very well,” said Chaudhuri, who is six months or more behind in paying doctors and who just two months ago said he was near bankruptcy.
Health plans, which contract with Chaudhuri’s group to take care of their members, have agreed to pay about $10 more each month under the deal, according to sources familiar with the negotiations. That increase will bring the monthly fee paid by the health plans to about $42, much closer to the average paid to other groups than the old rate of just $32, sources said.
In addition, the plans will contribute an undisclosed amount each in the form of advances on those monthly payments, outright loans and some cash. And Chaudhuri has agreed to invest more of his own money, according to his statements and information provided by sources.
In a separate negotiation, the company is also working with the old MedPartners ownership, now called Caremark Rx, which is a creditor of the new company.
“We’re all cautiously optimistic,” said Elizabeth McNeil, the health economics expert at the California Medical Assn., which has been involved in the negotiations and pushed hard for a bailout deal. “This helped avoid a catastrophic bankruptcy that would have really disrupted patient care and thrown the physician community into chaos.”
“We feel strongly that the industry needs to find solutions to difficult situations,” said Ken Wood, chief operating officer for Blue Shield of California, which will participate in the bailout even though it moved 31,000 patients out of the giant medical group last month.
Still, others in the medical community questioned whether KPC would be able to bounce back--particularly considering that many specialists have stopped accepting patients from the Anaheim-based organization.
Cigna Corp., for example, has already moved about 56,000 patients out of KPC, and does not plan to move them back unless they request it.
