Medical group bankruptcies: an emerging problem

This article explores the reasons why medical group practices and independent practice associations are filing for bankruptcy with increasing frequency. The problem stems from capitation payments by managed care organizations that are not sufficient to cover the costs of providing necessary care. The result is the dislocation of patients who have to find a new provider and providers who have to find a new practice setting. This article suggests that if the managed care industry could adopt clinical risk adjustment as a mainstay of physician compensation, medical groups and IPAs would have a far better chance of managing patient risk more successfully under capitation.