One of Chicago's largest physician group practices is reorganizing itself after filing for Chapter 11 bankruptcy protection from creditors.
Serving 16,000 patients in the Chicago area, Michael Reese Doctors Group IPA is the region's largest independent physician practice and the fifth-largest group.
The medical group is attempting to get out from under liabilities totaling $6.7 million as of April. Its assets are about $1 million.
"We don't have controlled costs," said the medical group's attorney, Daniel Zazove of Siegan Barbakoff & Gomberg. Mr. Zazove conceded that the problems are due, in part, to inept financial management of the group's receivables.
But he added that the practice has been unable to pay its bills largely because of a disparity in the way fees are structured among the group's practitioners.
While the general practitioners and other primary-care physicians are paid a set monthly per-patient rate by insurers, specialists are paid on a fee-for-service basis. As a result, reimbursement revenues from insurers "are not predictable," Mr. Zazove said.
Michael Reese Doctors Group is not a corporate subsidiary of the South Side's Michael Reese Hospital and Medical Center, which is owned by Louisville, Ky.-based Columbia/HCA Healthcare Corp.
In fact, Michael Reese Hospital is the medical practice's biggest creditor. Michael Reese Doctors Group owes the hospital $2.3 million for laboratory tests and other services provided to its physicians, many of whom have admitting privileges at the hospital.
Mr. Zazove said a creditors committee has been formed and the physician group is looking to engage a consultant to help restructure the practice's liabilities.
According to court records, the group is scheduled to come up with a plan of reorganization by the end of the summer. Meanwhile, the group already is moving to make its fee schedules more uniform, Mr. Zazove said.