Newport Beach doctor thrives in new practice after alleged ouster from another he had founded

Dr. Steven Abelowitz maintains a close relationship with most of the people under his care, often keeping up to date on developments in their personal lives in addition to their medical history. That’s partly why Elena Saberi was shocked when staff at Coastal Kids, the Orange County practice Abelowitz founded in 2001, told her he had quit the company and left the country without so much as leaving a message for the families he had looked after for years.

“The impression was that he was retired,” said Saberi, a personal injury lawyer who has also called upon Dr. Abelowitz to serve as a medical expert.

It wasn’t until years later, while following up with clinicians around the birth of her third daughter in March, that Saberi learned Coastal Kids had apparently misled her. The topic of pediatricians came up during an appointment with a physician, and they told her Abelowitz was still in Orange County, had opened a new practice called Ocean Pediatrics and was still seeing patients.

“I was like, ‘I’m sorry, what?’’” Saberi told the Daily Pilot during an interview Thursday. “I immediately wrote it down and refused to have my daughter seen at Coastal Kids for her three-day checkup.”

A lawsuit filed by Abelowitz in August alleges Pediatric Associates Holdings LLC, a management company owned by the hedge fund Summit Partners, L.P., sought to put profits before patients’ well-being, and then retaliated against the founder of Coastal Kids, ultimately ousting him from the practice he created in 2001.

Representatives for the defendants said they were “dedicated to enhancing the lives of children, their families and communities by delivering the highest quality of pediatric health care,” and have described Abelowitz’s claims as “without merit.”

That litigation is ongoing.

In the meantime, the doctor opened the first Ocean Pediatrics location in Laguna Hills on Aug. 16. The practice is entirely owned and operated by medical professionals.

In its first few weeks of operation, as many as 10 physicians, nurse practitioners and other medical professionals left Coastal Kids to join Abelowitz. Over a nine-month period his practice has added two other locations, in Ladera Ranch and in Costa Mesa in the Newport Back Bay area.

“It’s happened faster than we thought in perspective of opening,” Abelowitz told the Daily Pilot at his Costa Mesa location on Monday. “I didn’t plan to open three clinics; I thought we’d do the one and see how it goes. The actual reason for opening up the three clinics was more clinician driven.”

Abelowitz’s case against Pediatric Associates is just one example in a growing trend of private equity firms taking ownership of hospitals and clinics, which research has shown increasingly results in higher costs and worse outcomes for patients. His experience working with a hedge fund that he alleges compromised people’s health and safety has convinced him that medical professionals, not for-profit entities, need to be the ones guiding decisions about people’s care.

Existing law agrees with him; state Business and Professions Code 2052 bans corporations from practicing medicine in the state. What gets defined as the corporate practice of medicine is laid out in guidelines by the Medical Board of California.

However, the board doesn’t have any system in place or the resources to investigate or enforce potential violations of the code. That’s partly why state Sen. Chris Cabaldon (D-District 03) proposed SB 351, a measure that would bolster existing law and give the California attorney general’s office oversight over the matter, Cabaldon told the Daily Pilot during an interview Thursday.

The bill currently making its way through committees is nearly identical to another that had been vetoed by Gov. Gavin Newsom in September. The older version would have required the state’s atty. general’s approval for every purchase and sale of a healthcare practice by a hedge fund. Critics described that as too broad of an approach that would have burdened all future proposals for private equity partnerships in the medical field, not just those violating guidelines and possibly compromising patient health and safety.

The measure now under consideration removes that provision, and instead focuses on identifying and investigating those suspected of the corporate practice of medicine. With that adjustment, and support from a variety of medical organizations, Cabaldon said he’s optimistic it will move forward.

“There are a lot of totally above board — and great, actually — private equity relationships in the healthcare system” he said. “...there’s not really the mechanism to enforce the ban on the corporate practice of medicine. This bill makes that possible without having the attorney general review every single transaction that ever occurs.”

Abelowitz is among medical professionals who have testified before the State Senate in favor of SB 351. He notes that prior to his experience with Pediatric Associates, he viewed working with a hedge fund as a viable option for practices fighting to keep up with costs and stay afloat. He acknowledged that for some, that may seem like on of the few ways their doors open and continue serving those in their care.

But he urged physicians to consider other alternatives. He suggest struggling practices seek financial advisers, or even reach out to him personally, before getting into bed with a private equity firm.

“I was on the other side,” Abelowitz said. “If they’re underwater and they’re exhausted, this could be option, except you are sacrificing — and this is why I wouldn’t do it today — you’re sacrificing patient care and you’re potentially sacrificing safety of patients and sacrificing your reputation. Weigh the two.”

Dr. Steve Abelowitz, shown at the Costa Mesa location of his new practice, Ocean Pediatrics, opened the first office in Laguna Hills in August. His lawsuit against the hedge fund that ousted him from Coastal Kids, a practice he founded, is ongoing.

(Eric Licas)