In Arizona, multispecialty groups are facing extinction

This state's experience provides an extreme example of the troubles such practices face throughout the country.

By Cheryl Jackson, AMNews staff. April 2, 2001.

"Casa Blanca Medical Group has permanently closed its doors for business."

That March message update at the Casa Blanca Medical Group information line appears to be the last word on large multispecialty groups in Arizona. Now many physicians from those groups find themselves having to build smaller practices from the ground up.

Casa Blanca dwindled from about 80 physicians at several sites to about 14 doctors at a sole facility in Gilbert, then filed for protection under Chapter 7 bankruptcy laws in Arizona in January.

These are difficult times for multispecialty groups across the country, said Darrell Schryver, a managing principal at the Medical Group Management Assn. in Englewood, Colo. Managing multispecialty groups is generally considered inherently more difficult than managing single-specialty groups.

"Large multispecialty groups still are very viable, but they have to understand the business side of medicine and they have to manage their costs," Schryver said. "The vast majority of groups ... today don't understand what their costs are. Many of them can't tell you how much they're losing.

"The profit margins are still good. But as long as the reimbursements continue to shrink, we are going to see groups get into problems."

The dissolution of Casa Blanca appears to have stripped Arizona of its last large multispecialty group.

Like another prominent failure, the 1998 closing of Tucson-based Thomas-Davis Medical Centers, Casa Blanca's struggles increased after the group sold its assets to a national physician practice management company. Then the clinic, relying on capitation for its revenue, watched the bottom fall out after buying back its independence. [...]