Clinic Failures Put Physicians In Major Jam.

It's been a strange two weeks for Dr. Reza Danesh. The former medical director at a Long Beach clinic owned by KPC Medical Management suddenly found himself out of a job Nov. 20 when KPC abruptly closed all of its 38 clinics.

Since then, the family practitioner has worked out of his Redondo Beach home, dealing with his energetic toddler and answering phone calls on his own time from hundreds of his patients as he tries to smooth their transition to new care.

At the same time, he's been trying to figure out what he's going to do with his own career, one that was abruptly cut short after two and a half years at the clinic.

"I think I am unemployed right now, but I don't have a choice (in doing this). There are patients that have critical issues," said Danesh, who forwarded an 800 number to his home for his patients.

"As a professional, I am looking at some other doctors that have practices. I have, spoken to people in the Long Beach medical community. Maybe they can absorb me."

Danesh is one of hundreds of physicians who, like their patients, have been thrown into turmoil after the closure of Anaheim-based. KPC, which lost a struggle for survival that saw it bleeding millions monthly.

About 250,000 patients were suddenly cut off from their doctors and shunted into new practices by their managed care plans. Another 2,000 employees of the group, including about 500 doctors, lost their jobs. Some of those employees didn't discover their predicament until they showed up for work the day the company closed.

They also were told that their last paychecks could not be covered by the insolvent medical group. However, several HMOs agreed last week at a hearing in U.S. Bankruptcy Court to kick in $5 million to cover the checks.

"There is chaos out there," said Peter Warren, spokesman for the California Medical Association, which is critical of the way the state has handled the failure. "What has happened has not been a smooth transition but a scramble. A doctor who is an employee should not have to set up an 800 number to take care of his patients."

Pediatrician Carl Muchnick left KPC's Torrance clinic just two weeks prior to its closure, after 21 years of working with the same group of doctors through various forms of ownership. He is now a sole practitioner in association with Little Company of Mary Hospital in Torrance.

"To try and find an alternative way to practice after 21 years is very difficult. It's life-altering. It's been a struggle. I am much happier in this office, but the transition has been horrific," said Muchnick, 57, who is still supporting two teen-age children at home. "I am surprised it (KPC) lasted as long as it did."

The pediatrician said that, although he has signed up with major health care insurers, the fact that he is still listed as a KPC doctor has made it difficult for his patients to find him.

But the CMA, which represents 34,000 doctors statewide, along with the 8,000-member Los Angeles County Medical Association, say the biggest physician losers may be the specialists who contracted to handle KPC patients.

KPC directly employed primary-care doctors, but sent patients outside its clinics to obstetrics, oncology and other specialized services provided by contract specialists. It now owes those specialists $40 million, according to figures released at the bankruptcy hearing, Warren said.

And there are worries that KPC will never make-good on those debts, given it is in strong disagreement with HMOs. KPC claims the HMOs owe it $11 million in payments for patient care.

Dr. Daniel Higgins is the medical director of emergency services at St. Francis Medical Center in Lynwood. The 10 doctors, including Higgins, who service the emergency room are out as much as $50,000 for care given to KPC patients.

Under state law, doctors do not directly work for hospitals and their practice groups are financially responsible for the patients they see.

"We have seen a lot of KPC people come in for their medical care, and they have' not paid us for a year," he said. "It's tough on the emergency physician. Everybody has to work harder, and these plans know we have to see their patients. We are the safety net."

The loss wouldn't be so much to bear, Higgins said, but for the fact that the group already wrote off $100,000 after MedPartners Provider Network Inc., KPC's predecessor, failed last year. And all that was on top of even more money lost in a prior medical group failure.

KPC was formed when Dr. Kali Chaudhuri, a Hemet physician and owner of Riverside-based KPC Global Care, bought 72 of the MedPartners clinics.

Another victim of the closure has been OrthoCenter Medical Group, a chain of orthopedic clinics headquartered in Pasadena that its owner, Dr. Ed Morgan, figures is out at least $100,000. OrthoCenter contracted with KPC to provide orthopedic care to KPC patients.

"I don't expect anything. There is no money. What we are doing is billing the health (insurers) direct and demanding they pay us," said Morgan, noting that health plans stopped paying KPC at the end.

Morgan says the loss will prevent the center from hiring additional doctors as it had planned, but he is still counting his blessings.

"If this happened a year ago it would have closed us. A year ago, KPC contracts represented a much larger portion of our total revenue," he said.

Indeed, KPC's failure could have been worse all around. When it closed its doors last month, it was the largest independent medical group in the state, exceeded in size only by Kaiser Permanente. But the failure had been anticipated for months, and KPC had already lost 750,000 patients, forcing it to lay off 500 employees and close 29 clinics in October.

That prompted a lot of doctors to start to look for work elsewhere, including Dr. Eric Batres, a family practitioner who left KPC's Downey clinic to join a small private practice with one other doctor in Cudahy. Batres had worked at the clinic, under various owners for 17 years.

"After 17 years I was loyal. I felt sorry for all the patients, but I was anticipating things were not going well," said Batres. "I left in the middle of July. They were running out of supplies. Patients were not being serviced as I thought appropriate."

Batres said the biggest challenge was getting in contact with his former patients, who number in the thousands. He said the remaining workers at the KPC clinic would tell his patients that they did not know how to get hold of him.

"In fact, I was bringing my business card over (to the KPC clinic) every week, but they didn't want to lose any patients," he said, so they wouldn't refer the patients to him.

Dr. Robert Vinetz is another doctor who left KPC. He worked at the Fox Hills group, starting there in 1973, long before the current crisis in managed health care. Like Muchnick, he weathered several management changes.

A pediatrician, he decided to leave primary care altogether and take an administrative job with the county Department of Health Services this year, sensing that KPC was headed for failure.

He said he was spending more and more time filling out paperwork, and was given less and less time to see his patients, forcing him sometimes to come in on weekends and finish paperwork.

"Everybody saw the writing on the wall. Everybody I knew, at least from the physicians' side, thought the organization as it was structured and run, was not viable," he said. "We all knew Humpty Dumpty was going to fall off the wall."