MedPartners is moving ahead with plans to sell assets representing 1,000 physicians after getting the go-ahead from a Los Angeles County Superior Court.
The court on May 11 approved an interim agreement between the state and MedPartners that returns control of MedPartners Provider Network to the company.
In return, a state monitor will ensure that the network pays all its bills. The monitor replaces a state-appointed conservator who was running the network after a March 11 state takeover.
The state Department of Corporations seized the network, which sets up contracts and collects and distributes capitation payments, and placed it under Chapter 11 bankruptcy protection because of its financial troubles.
MedPartners is negotiating with the state and various providers to settle the bankruptcy case, allowing it to exit California. Hospitals and other providers in particular have been dubious of the MedPartners network's ability to pay past claims, which many hospitals say are well into the millions of dollars.
The deal must be approved by the U.S. Bankruptcy Court in Los Angeles, where the MedPartners Provider Network Chapter 11 case resides.
Any sale of assets also must be approved by the Bankruptcy Court, which considers the doctors' contract with the network an asset.
MedPartners intends to sell physician assets as part of its plan to exit physician practice management. The plan, announced last November, will allow MedPartners to focus on its Caremark International pharmacy-benefit management division.
So far, physicians don't appear to be leading the buying. No sales had been confirmed as of Modern Physician's deadline.
One of the more prominent bids is coming from Los Angeles-based Paladin Investment Banking. Its group, called MedManagement Acquisition Corp., would acquire assets of as many as 500 physicians in MedPartners' Southern California Medical Corp., Mullikin and Friendly Hills practices, according to another bidder.
Physicians would hold a minority stake in the new organization, although the proportion is not known. Paladin executives did not return calls seeking comment.
Some 120 physicians in Pacific Physician Alliance Medical Group wanted to work with Paladin to buy back their practices, says MaryAnn Ricardo, a Gardena, Calif.-based consultant representing the medical group. But the Paladin group rejected their bid.
The alliance is still trying to find a way to buy back its practices, Ricardo says.
Spokesman Robert Mead says MedPartners won't comment on negotiations.