An outline of an article By SHARON BERNSTEIN, TIMES STAFF WRITER in the L.A. Times (9/12/99) about problems of doctors groups that are facing bankruptcy.
Physicians organizations provide care to 23 million Californians
Patients will experience changes in the way they access care.
The groups serve as quasi-insurance companies, accepting fees from health plans and using the money-after taking a cut-to pay their physician members for treating patients.
Industry observers predict that within the next 18 to 24 months, most groups will be bankrupt, or squashed under by a combination of poor management and inadequate payments.
The ones that survive will be totally different. Most likely operating as a non-profit, perhaps serving only as a loose affiliation of physicians.
Some attorneys and accountants knew it was coming.
The last legislative session, lawmakers showed little interest.
A reform package was approved setting up minimal financial regulations.
They are not expected to stem the tide of bankruptcies looming.
Thousands of Californians could be caught in no-man's land, as doctors reorganize.
115 physicians groups have declared bankruptcy or gone out of business in the state.
About 300 groups still remain from a peak in 1996.
Some collapses were notable. Medpartners Provider Network and FPA Medical Management provided care for 1.4 million Californians between them and fell within one month of each other.
The solvency portion of the legislative package sets up a grading system for physicians groups, and requires the groups to make their grade public.
Gov. Gray Davis would only approve the package if several key provisions were omitted, including the details of the system itself.
The provisions to require the groups to open their books freely to health plans-and which held the plans responsible for contracting with shaky groups-were omitted.
It is expected that if the grading system is set up properly consumers will be able to check the health of the medical groups to which they belong.
An industry coalition on medical insolvency problems had recommended much stronger measures, including that only financially strong organizations be allowed to serve as quasi-insurance companies.
These types of organizations are extremely risky and has proved the undoing of nearly all of the groups.
Beau Carter, who heads the industry coalition on insolvency, said a good set of financial regulations could slow or even forestall many collapses, and even save the medical group model.
Selling to a new partner does not always result in a profitable organization.
Sometime the new owners are the very doctors who sold out.
Some experts say it is one thing for doctors to band together to share office expenses and some expertise, but far different to attempt a profit-making operation that takes the risk normally assumed by an insurance company.
The model of large provider organizations accepting global risk has proven to be very problematic.
It is predicted that some large groups will dissolve altogether and in some cases reform, offering doctors economies of scale in purchasing supplies and added clout when negotiating with health plans.
Doctors will not likely serve as the middle man as they are today.
Some groups will go back to fee-for-service.
If a large number of doctors do not join groups, some consumers will have greater choice in choosing specialists and hospitals.
The most disruptive-impact will occur at the time a group goes under, declaring bankruptcy or is sold.
- They are so deeply troubled they will cease to exist-or be vastly changed-within two years.
- Hard to predict if the changes will be harsh and disruptive or incremental and merely inconvenient.