In what some experts say illustrates the disillusionment physicians are experiencing with management service organizations, a San Jose, Calif.-based medical group filed for bankruptcy late last month as part of a strategy to terminate its MSO contract.
"We had incurred major liabilities, wanted to reorganize and could not do it (under) the onus of an MSO contract," said Ramon L. Jimenez, M.D, president of Personal Choice Medical Group.
Personal Choice's Chapter 11 bankruptcy, filed in federal court Jan. 23 in San Jose, listed liabilities of $2.8 million and assets of only $250,000.
Jimenez blamed Personal Choice's MSO, UniMed, an affiliate of Burbank, Calif.-based UniHealth, for failing to market and manage the 400-physician group effectively.
UniHealth officials declined comment on the matter.
UniHealth itself is undergoing a shakeup with the resignations of two of its top hospital executives and the possible sale of its managed-care plan (See related story, p. 14).
Jimenez's claim, observers say, is likely to be repeated by other medical groups in the future.
"A lot of (MSOs) often don't have much depth and don't do everything needed to be successful. They often only do the obvious things," said Wanda Jones, president of New Century Healthcare Institute, a San Francisco-based consulting firm.
Jones added that diversified organizations like UniHealth are even less likely to be focused on their MSO businesses.
"A lot of MSOs are over-trumpeting their abilities to medical groups," agreed Richard Sinaiko, chief executive officer of Healthcare Practice Enhancement Network, a Los Angeles-based consulting firm.
UniHealth had taken over management of Personal Choice in late 1995 by virtue of UniHealth's acquisition of San Jose Medical Group, a 1,000-physician group practice. The group had signed a 15-year MSO pact with Personal Choice in 1993.
Jimenez suggested that UniMed showed far more interest in running the larger and more lucrative San Jose Medical Group, making Personal Choice a peripheral concern.
"They were not as aggressive as they should have been," Jimenez said.
Jimenez said UniMed promised a significant advertising and mailing campaign for Personal Choice but that its efforts did not evolve much past a few newspaper ads.
And while UniMed had managed to increase Personal Choice's patient base to 20,000 covered lives from 15,000 during the past two years, Jimenez claimed it has been marginal in the way it has handled contract negotiations and claims processing.
While observers agree that grievances such as Personal Choice's will only mount, they are taking a wait-and-see attitude as to whether bankruptcy would be the preferred method of shaking off an unwanted MSO.
"I'm surprised they're using bankruptcy as a mechanism to deal with an MSO contract . . . it's a pretty drastic solution," Sinaiko said. "But I have little doubt that you'll see more legal maneuverings over these matters in the future."