A bankruptcy judge has released $10 million to providers to continue care to 1.3 million Californians whose premium dollars flowed through the MedPartners Provider Network.
Some providers had threatened to withhold services until they received their monthly payments for March.
Eugene Froelich, conservator of the risk-contracting organization, said in court papers that the payments were needed to "avoid a meltdown" of the delivery network.
At least 13 hospitals are among the 20 largest creditors of MedPartners' risk-contracting business in California, according to documents filed with the U.S. Bankruptcy Court for the Central District of California in Los Angeles.
The largest creditor is 172-bed Whittier (Calif.) Hospital Medical Center, which claims it's owed $6.7 million.
According to the filing, the Long Beach, Calif.-based MedPartners Provider Network had assets of $127.5 million and debts of $73.5 million.
The bankruptcy filing was initiated after the network was seized earlier this month by the California Department of Corporations. MedPartners, based in Birmingham, Ala., said the California operation was not insolvent. The company has filed suit to regain control (March 22, p. 6).
Separately, MedPartners completed the sale of Cardiovascular Specialists, a 10-physician practice based in Memphis, Tenn., to InteCardia, a private physician practice management company based in Chapel Hill, N.C.
MedPartners said it will receive $17 million in cash proceeds from the sale. The assets include a cardiac catheterization facility. InteCardia said it will finance the purchase with an $8.2 million venture capital infusion in addition to funds remaining from an earlier $18 million financing by the same syndicate of investors led by the Sprout Group, an arm of New York-based Donaldson, Lufkin & Jenrette.
