An independent report on how many California medical groups have closed for financial reasons shows there have been three dozen closings in less than five years, but the state fiscal environment isn't as poisonous as an earlier California Medical Association survey indicated.
Cattaneo & Stroud, a Burlingame, Calif.-based consulting firm, researched medical group closings between 1996 and July 1, 2001. They found that 36 medical groups have closed for financial reasons since 1996. Of those 36 groups, 22 filed for either Chapter 7 or Chapter 11 bankruptcy protection. The California HealthCare Foundation, a not-for-profit group that studies healthcare conditions in the state, funded the research.
In mid-July, the CMA released its own unscientific survey, saying that about 40% of California physicians intend to stop practicing medicine within the next three years. Health plan officials quickly questioned the CMA survey. CMA officials say medical group failures are only half the problem, asserting that retirements and departures are also an issue.
Grant Cattaneo, a principal with Cattaneo & Stroud, says he didn't compile his report to support or refute claims from either side of the debate. He says he wanted to get an accurate picture of how many groups were folding. His group contacted each of the closed medical groups or their representatives to find out why they closed. He verified bankruptcies with court filings.
The report, released in early July, was the first time that an independent group has weighed in on the closure fray.
Cattaneo says he collects information differently than the CMA. "My definition is the group must have six primary care physicians and have a contract directly with an HMO," he says. CMA officials say they include in their numbers any medical group or practice whose physicians report "financial difficulty."
There's no independent verification of that difficulty nor is there a solid definition of financial difficulty.
Cattaneo's research closely mirrors a report issued by the California Association of Health Plans in March. It showed that since 1998, 32 medical groups had either filed for bankruptcy or closed due to financial problems.
CMA officials dispute CAHP's findings and claim Cattaneo's numbers are faulty.
The most recent CMA survey showed that 30 groups had filed for bankruptcy since 1996 and another 36 medical groups had closed, been bought or merged due to financial reasons. Those numbers came from self-reporting by physicians, but CMA officials say they haven't been independently verified.
In March, CMA officials said 154 medical groups had filed for bankruptcy, closed or merged for financial reasons since 1996. At other times, CMA officials have said as few as 38 and as many as 160 medical groups have closed in time spans that range from two to five years.
CAHP officials say Cattaneo's research shows that, while medical groups have closed, the situation isn't as dire as CMA officials have claimed.
"I think what it suggests is an accurate depiction of what's happened," says CAHP spokesperson Bobby Pena.
"I'm not suggesting that it doesn't mean there aren't stresses in the system and improvements that need to be made, (but) we can't allow ourselves to determine realistic solutions or fixes or regulatory solutions based on exaggeration."
The fact that the research was done by an outside consulting firm with "no ax to grind" gives the report credibility, Pena says.
CAHP officials referenced Cattaneo's report during a conference call in mid-July. The call was in response to the CMA's study on retirements and departures.
CMA officials mailed the survey to 19,000 members. About 2,300 were returned.
CMA officials say their report shows physicians need to be able to band together and negotiate prices with physicians.
The CMA report was released the day before a California Senate Judiciary committee hearing on Assembly Bill 1600, which would allow physicians to bypass federal antitrust laws and band together to negotiate with health plans.
However, that hearing was postponed at the last minute because the bill's author wasn't available; yet some observers question whether AB1600 was shelved because there weren't enough votes to get it out of committee.