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Medical Assn. Says KPC May Be on Brink of Bankruptcy


The California Medical Assn. has warned doctors affiliated with KPC Global Care Inc., the state's largest for-profit medical group, that bankruptcy for the Riverside-based physician organization "may be imminent."

The failure of KPC would bring upheaval for the second time in less than two years for the 500,000 patients and several thousand doctors who work with the medical group. Last year, state regulators took over a division of the group's previous owner, MedPartners Inc., and forced it into bankruptcy.

The company's woes crystallized for many Californians the deep troubles in the state's managed-care system. MedPartners, a publicly traded company based in Alabama now called Caremark Rx Inc., had built the group by purchasing some of the state's most venerable managed-care organizations, and until the company's crash in March 1999, it was the darling of for-profit medicine and Wall Street.

In June, the group's new owner, Dr. Kali Chaudhuri, told The Times that he could survive only two to four months without an infusion of cash from the health insurers operating in the state.

For the Record
Los Angeles Times Thursday September 14, 2000 Home Edition Business Part C Page 3 Financial Desk 2 inches; 37 words Type of Material: Correction
Global Care--To clarify an Aug. 3 story, KPC Global Care Inc., a financially troubled Riverside-based physician organization that is California's largest for-profit medical association, is not the same company as Van Nuys-based Global Care Medical Group.

Various health plans, which have already lent Chaudhuri $12 million to keep his group afloat, have been negotiating a rescue plan for weeks.

But so far, there is no deal. And the CMA, which has supported Chaudhuri in his efforts to keep the organization going, expressed concern that the bailout, even if it materializes, might not be enough.

For his part, Chaudhuri says he is close to completing a deal with the health plans.

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