|
 |
 |
     
|
 |
Los
Angeles Daily News Front page, AGOURA HILLS -- For scores of local physicians, the bankruptcy last month of Long Beach-based MedPartners Provider Network proved to be a financial and administrative nightmare, leaving some to wonder if and when their next paycheck would arrive. But for Dr. Marvin Kanter, the firm's woes represent a potentially lucrative opportunity. Having recently extricated his own Agoura Hills physician group from MedPartners' parent, Kanter and three partners hope now to annex some of the struggling company's other local group practices, creating in the process a regional physician-management powerhouse. It's terrain others have traveled and stumbled on, but Kanter and company are convinced they are positioned for success. "We've seen this whole industry and the way it's changed," Kanter said. "It's not as bad as everyone paints it." Working in his favor is that Kanter has made a career of turning adversity to advantage. In the late 1970s, when other doctors were bristling at what looked to be a disenfranchising new way to finance medicine, the West Valley pediatrician embraced managed care by starting his own physician group to negotiate top rates from insurers like Blue Cross, Health Net and PacifiCare. As HMOs grew, so did Kanter's Community Medical Group, expanding from a handful of doctors and 100 patients, to nearly 150 primary care and specialty physicians treating 50,000 enrollees in Simi Valley, Thousand Oaks, Agoura Hills, West Hills and Tarzana. In 1996, when industry consolidation pushed many smaller players out of business and cleared the way for a few large management firms to buy up practices across the nation, Kanter sold to one of the biggest, MedPartners, grossing roughly $25 million and retaining an executive position with the firm. At the time, many doctors considered companies like MedPartners -- whose parent company is based in Alabama -- to be a godsend, allowing them to give up fiduciary responsibility while still practicing medicine. "The world was changing and we thought MedPartners was the way to go," Kanter said. The relationship was not meant to be, however, and Kanter's biggest coup came in December when he and his partners bought their business back from MedPartners at a significant discount, missing by days a retroactive bankruptcy filing forced on the Long Beach-based division by state regulators. Despite operating the largest physician network in the state, one caring for more than 3 million health plan enrollees at its peak, MedPartners hemorrhaged money. A routine audit, followed by a closer examination of the company's books last month, revealed finances so shaky the state Department of Corporations seized the firm's administrative wing and immediately filed for bankruptcy protection. To hear Kanter tell it, the decision to get out of MedPartners early was a no-brainer. "MedPartners was in disarray," he said. "I was worried about where things were going and thought the group would be better off, both for the doctors and for patient care, if we re-engineered our identity." Now free from the corporate yoke, Kanter and his partners are working to stabilize their own physician ranks before embarking on an expansion plan that they expect will double the company's size by year's end. "Right now we are the dominant player in the West Valley," Kanter said. "We will be more dominant in the whole Valley, and other parts of L.A. as well." Key to the strategy is attracting new physician group practices, and that's where MedPartners may prove useful to Kanter a third and final time. Since the state stepped in, MedPartners has declared full retreat in California, voicing its intent to unload practices either back to physicians or to outside investors. "We've made it public we're looking to sell," said MedPartners spokesman Robert Mead. Combined with a recent slump in market prices for medical practices, that anxiousness to leave could push MedPartners to sell off its practices at a discount. The best of those practices in the Valley, and eventually Greater Los Angeles, would then be potential targets for Kanter's clan. Under the banner of Progressive Health Care Systems -- an administrative entity created in the buy-back of Community Medical -- the company expects to double its physician and enrollee ranks by the end of 1999. But instead of buying MedPartners' practices, they hope to convince the new owners to buy into Progressive. In exchange for a one-time fee and a sliver of future billings, Progressive would manage the practices' paperwork, coordinate standards of care and negotiate contracts for the physician groups with health plans and hospitals. Progressive said it would also connect practices through a corporate intranet, allowing for online referrals and consultations. "We want to manage physicians, not own them," Kanter said. There appears to be some support for the concept and similar groups are starting to crop up elsewhere in the state. Riverside Medical Clinic, a 90-physician practice in Riverside County, was in the process of buying itself back from MedPartners when the state stepped in. "Originally we felt bigger was better, but we've seen that local systems probably work better because they're more responsive to the community," said Riverside Chairman Dr. Steven Larson. "The era of big, roll-up physician practice management companies is over. They don't add value." Larson said it is unclear how big groups such as his own and Kanter's can grow before they reach their own points of diminishing returns, but "certainly MedPartners passed that point." Larson said he expects Riverside to close its acquisition within another month or so. Others voice similar support for physicians regaining their practices, but warn that independence is not a cure-all. "If these physicians can buy their practices back and regain control, we think that's a good thing," said Elizabeth McNeal, vice president of medical policy for the California Medical Association. But a bad partner can be nearly as damaging to a practice as a bad owner, McNeal said, and execution will be key to the success of groups like Progressive and Riverside. If that's the biggest concern, Kanter believes, Progressive should thrive. "Progressive is going to be a physician-oriented company," he said. "We're going to try to create the right incentives for physicians to want to work with us here. We know we've got to be very careful how we re-create managed care going forward and our bent is to pay attention to the details and do it right."
|
||||
