California Advantage, the California Medical Association's highly touted but chronically undercapitalized managed-care plan, filed for federal bankruptcy protection last week, after losing $11 million in just two years.
In doing so, it joined a lengthening parade of doctor-owned plans that couldn't compete effectively in the managed-care marketplace.
The CMA had revealed the fate of the plan earlier this month (June 8, p. 6).
The physician-owned plan, started by 7,600 doctors two years ago with investments of $1,000 each, will liquidate gradually so it can continue to provide coverage to existing policyholders, officials said. Liquidation will proceed over the next 60 to 90 days.
Since its launch in July 1996, Oakland-based California Advantage has attracted just 7,000 enrollees statewide. Late last month it laid off all but a handful of its 30 employees, including Chief Executive Officer Kenneth Reuter.
Legion Insurance Co., the plan's Philadelphia-based underwriter, is assuming operation of California Advantage and will handle the process of shuttering the plan.