Leroy Sterling, M.D., never sold his practice to FPA Medical Management, but the physician practice manager's bankruptcy filing might drive him out of business anyway.
The company's July 19 bankruptcy filing has been damaging to physicians whose practice assets it owned or who were with affiliated independent practice associations. FPA has cut its non-IPA ranks by more than half; the status of its IPA doctors is unclear.
But thousands of specialists, including Sterling, also counted on FPA for referrals. Unpaid claims owed to specialists have driven up physician losses from the FPA bankruptcy to perhaps hundreds of millions of dollars, according to preliminary estimates by doctors and medical associations nationwide. FPA and health plans stopped paying claims when FPA filed for Chapter 11.
Sterling, a Houston cardiologist operating a solo practice, relied on referrals from FPA-affiliated University Medical Group for $50,000 to $100,000 of an average $150,000 in monthly billings. He says FPA owes him at least $114,000 in back claims; but as an unsecured creditor, he'll probably never see it. "I don't know what to do," Sterling says. "I've contemplated everything from trying to go out and market new primary-care physicians to actually closing my practice."
Sterling already has told his five-member staff that times are going to be tight. He hasn't replaced an office manager and medical assistant who recently departed. "I'm not sure I can survive with the way the environment is now," he says.
Being driven out because of FPA's failures would be a cruel denouement to Sterling's hard-luck career.
In 1987, he started his first Houston practice with two other cardiologists. In 1992, one partner left for University of Texas M.D. Anderson Cancer Center. The next year, his other partner died of colon cancer at 45.
Sterling then joined a local multispecialty group but left in 1995 because of dissatisfaction with a pay scale he says favored primary-care doctors. An IPA he joined went bankrupt in 1997.
So, he set up a solo practice and got a referral contract with University Medical Group. "That was the best revenue stream I ever had," he says.
But that stream stopped flowing in the months before FPA's bankruptcy filing. Sterling says FPA failed to pay him in May and June. A few weeks before the filing, FPA announced it was shutting down University.
Sterling has a job offer in Ventura, Calif., but he's not sure he wants to move his wife and three children -- or leave his aging parents in nearby Galveston.
He had some hope of getting back part of his FPA work when, last month, the company sold University's Houston operations to MedPartners, which runs the city's Kelsey-Seybold Clinic. But then MedPartners announced eight of 13 University clinics would close by Aug. 31.