The California Medical Association blames the failures on the unwillingness of HMOs to pay physician groups high enough rates to cover the cost of medical care. Groups that are badly managed, that don't track the care they provide and don't know how the money is being spent, will have a hard time surviving. It ain't just the money. He is studying medical group failures under a grant from the California HealthCare Foundation. The other 10 concluded they didn't have enough HMO patients to succeed.
Medical groups are thus at risk of losing money if they manage poorly or spend too much on care.
Business failures are a consequence of that. While groups like KPC have gone out of business , other medical groups in California are doing fine. They have learned to effectively manage care and its financial costs and have been able to live off the payments from HMOs. Among the examples of success are Beaver Medical Group in Redlands and HealthCare Partners Medical Group, a Torrance-based group with 2,500 doctors and about 400,000 HMO patients. Dr. Robert Margolis heads HealthCare Partners Medical Group.