Financial Ills Close Clinics
Dave Griffin went to the Westminster clinic owned by KPC Medical Management after administrators phoned to say his son’s Dec. 9 tonsillectomy had been canceled. He was greeted by a sign on the door: “No appointments will be seen today. For medical emergencies, call 911.”
The clinic was closed.
“It’s not fair. What am I supposed to tell my teenage kid, who is constantly suffering from sore throats and [is] miserable?” he said. “Now I have to start all over.”
It was a theme echoed throughout the day as doctors and patients looked for answers after Sunday’s decision by KPC’s owner, Dr. Kali Chaudhuri, to shut down the business. KPC, which once provided care for 1 million people, had seen its patient base dwindle to about 252,000 patients, 56,000 in Orange County, according to the state Department of Managed Health Care.
“It sure is a mess. They don’t give you any notice,” fumed Garden Grove resident John Halvorson at the KPC clinic on Magnolia Street in Westminster. “I’m here to get my blood pressure pill, and it’s not ‘optional.’ ”
For a decade, Halvorson has relied on the clinic’s doctors and nurses to fine-tune his heart medication and attend to his painful rheumatoid arthritis, treatments outlined in a medical file that is more than a foot thick.
Although Halvorson didn’t see his personal physician--there were none on duty--a clinic worker gave him his prescription. But there was no one to fill out the paperwork to have the pills covered by his insurance, so he paid $22 out of pocket for half of the prescribed pills.
The closing of the group’s 42 clinics across Southern California, including nine in Orange County, marked the poignant end of a long journey for some of the state’s most venerable medical practices. KPC comprised some of the nation’s original managed-care practices, medical groups started in Los Angeles in the 1920s as a way to provide affordable health care to working people.
In the 1990s, the former MedPartners Inc. bought about 100 clinics, including those owned by Friendly Hills and Mulliken medical groups, descendants of Los Angeles’ Ross-Loos clinics, thinking there was big money to be made in California’s growing market for managed care.
Under MedPartners, which has since changed its name to Caremark Rx, the clinics became the largest single for-profit medical group management company in the state.
But the business model was flawed. MedPartners and similar companies acted as middlemen, contracting with health plans to provide care for their patients in exchange for a set monthly fee. MedPartners crashed in 1999, its once highflying stock down to less than $10 a share and care for its members at risk of disruption.
State regulators took over in 1999, thrust a subsidiary of the company into bankruptcy and sold 72 of the clinics to Chaudhuri, who named the enterprise KPC Medical Management.
With agreements from health plans and even the former owners in place to help stabilize the company, Chaudhuri was convinced he could make the enterprise work. But the clinics were losing $10 million a month--more than he originally thought--and by late last year, KPC had stopped paying the thousands of doctors who provided specialty care to the company’s patients. The company also stopped paying suppliers of wheelchairs, oxygen tanks and other supplies.
The company closed 30 clinics, laid off doctors and made a plea to regional health plans for more money.
In September, the health plans agreed to bail out the company, providing loans of about $30 million and increasing the monthly fees. But for reasons that remain unclear, KPC was again $20 million in the red by November and had stopped paying doctors.
Sunday, company President Donald Smallwood said KPC would be closed.
Company officials planned to meet with bankruptcy attorneys Monday, a high-ranking source said, and probably will seek bankruptcy protection this week.
Behind the scenes Monday, accusations flew between doctors, health plans and the company, all with different ideas about what went wrong. The California Medical Assn. accused the health plans of deliberately putting KPC out of business by delaying bailout payments and yanking patients out of the group.
The health plans said that they did pay and that patients had to be moved to ensure their safety as KPC continued to struggle.
But all of that seemed beside the point to patients seeking care at KPC clinics.
Mark Vitello was supposed to find out whether he had diabetes.
But when the San Fernando Valley resident arrived for his appointment at the Mulliken Medical Group clinic in Chatsworth, he was turned away. Someone would call him about his test results, an office worker told him.
“I went to the chart room and the lady said, ‘It’s closed, we’re not in business anymore,’ ” said Vitello, an emergency medical technician. “Unfortunately, I have to start all over.”
Throughout the day, health plan representatives, along with those few KPC employees who showed up even though they hadn’t yet been paid, directed patients to emergency rooms or to new doctors.
“It’s a little inconvenient,” said Gil Key, a Cigna Corp. managed care representative helping redirect patients at the Westminster KPC office.
But some patients were downright mad.
“The medical profession and the insurance situation is really deteriorating, and it’s at the cost of the patients,” said Jonica Esperti, a Westminster patient upset about the closure. “Basically, I’m without a doctor again. My health is fine. But other people here have much worse situations, like serious heart conditions. People could die.” For workers, a big headache will be to transfer patient files to new clinics, said the clinic’s manager, Lisa Moorlag, who found out Friday night about the shut-down.
Doctors were on site, too, but only to finish processing and filing laboratory results and to call patients with urgent needs about the closing.
All health plans with members in KPC have been ordered by the state to place newspaper ads with phone numbers for patients to call if they need care. And all of KPC’s patients will receive letters from their health plans with the name of a doctor to whom their medical records will be forwarded. Patients preferring a different doctor should call their HMO.
“The most important thing people should recognize is that this is a medical group that is in financial difficulty--not their health plan,” said Walter Zelman, president of the California Assn. of Health Plans. “Their health plan is obligated to give them all necessary care at the time they need it.”
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Times staff writers Marc Ballon, Andrew Blankstein and Ofelia Casillas contributed to this report.
