Picking up the pieces of so many PPM failures over the past two years has been an arduous task, made more difficult by the fact that dying firms continue to bleed cash as fast as an unprofitable dot-com.
KPC Medical Management, the Southern California successor to failed PPM MedPartners, filed for bankruptcy and shut its doors in November, still owing its physicians an estimated $40 million in reimbursements. The rest of what used to be MedPartners, now a pharmacy benefits manager called Caremark Rx, will absorb an estimated $90 million in charges as a result of KPC breaking several long-term property leases.
Meanwhile, the cleanup persists from a 1999 casualty. Dallas-based Physicians Resource Group, a bankrupt manager of optometric and ophthalmic practices, began liquidating its assets on Dec. 15.
Durham, N.C.-based PhyAmerica Physician Group, which specializes in emergency medicine, could use a little CPR itself. Its shares are worth less than a dime, and the company is under federal investigation for possible Medicare and Medicaid fraud. Meanwhile, Chairman, CEO and founder Steven Scott, M.D., is the target of a racketeering lawsuit filed by disgruntled shareholders, who are attempting to block Scott's effort to privatize the firm.
At least one group, the Washington-based American Association of Emergency Medicine, has come out against all forms of what it calls the "corporate practice of medicine." The organization's president, Robert McNamara, M.D., says, "We don't believe that management of controlled physicians is in the best interest of the public." He believes that attention to corporate profits often compromises the quality of care.
McNamara says that AAEM formed in 1993 in reaction to the problems emergency room physicians were having with PPMs, specifically Coastal Physician Group, the predecessor company to PhyAmerica. "PhyAmerica probably considers us Public Enemy No. 1," he says.
Another PPM for emergency room physicians, EmCare, with 4,700 physicians and other clinicians under management, has become an albatross around the neck of its owner, Canadian bus transit giant Laidlaw. The firm has had EmCare and another subsidiary, ambulance operator American Medical Response, up for sale since September 1999.
Laidlaw took write-downs of $1.3 billion in each of fiscal years 1999 and 2000 for its healthcare holdings, and the New York Stock Exchange halted the company's trading late last month. Laidlaw issued a statement from a Jan. 5 meeting with stock analysts, saying matter-of-factly, "The news has not been good from a valuation perspective."