In a bankruptcy filing this morning, five-hospital Doctors Community Healthcare Corp., Scottsdale, Ariz., squarely placed the blame for its financial troubles on National Century Financial Enterprises, Dublin, Ohio. In doing so, it became the third healthcare provider this month to seek Chapter 11 protection from creditors citing NCFE's failure to provide promised financing. NCFE, which buys providers' accounts receivable and advances them cash, itself filed for bankruptcy protection this week, and the FBI launched an investigation into allegations of financial malfeasance at the company. NCFE has not paid customers for several weeks, since September in some cases, leading to the bankruptcies this month of at least two other providers besides Doctors Community -- a home health firm with ownership ties to NCFE and physician practice manager PhyAmerica Physicians Group, Durham, N.C.
For-profit Doctors Community, founded in 1994 by lawyer Paul Tuft and primarily owned by Tuft, operates hospitals in California, Chicago and Washington. In its bankruptcy filing in Washington, the company reported assets of about $227 million and liabilities of about $675 million. The filing said company officials believe "without equivocation . . . that the debtors (Doctors Community's hospitals) have been compelled to commence these Chapter 11 cases primarily because the NCFE entities defaulted in their obligation to finance the debtors' receivables." Doctors Community is a creditor to NCFE as well as a customer, owing the firm more than $400 million for financing acquisitions. In addition, NCFE has an 11.5% stake in the company. -- by Mark Taylor and Jeff Tieman