QuagMeyer: A cautionary tale of a failing medical practice

An Illinois medical group is in bankruptcy court after a 10-year streak of business decisions gone wrong put it in a multimillion-dollar hole. The doctors affiliated with that group likely will never see the money they're owed.

By Bob Cook, AMNews staff. Oct. 7, 2002.

Meyer Medical Group died in September at the age of 89. There's some question whether the cause of death was murder or suicide. But it's clear that the group left no inheritance.

The southwest suburban Chicago medical group filed for Chapter 11 bankruptcy reorganization on May 8 with $36 million of claims against it -- $31.6 million by physicians. On Sept. 5, the group threw in the towel by electing to liquidate. Meyer lists $4.4 million in receivables and claims against insurers as potential saleable assets. With bankruptcy law placing physicians in line behind attorneys, banks and the Internal Revenue Service, it is virtually assured that none of the doctors will ever see the money they're owed. Some physicians' claims ran into the hundreds of thousands of dollars.

The Meyer bankruptcy is a case study in how business issues can wreck a practice. Meyer tried to stay ahead of the managed care curve, but instead their efforts got them swallowed up in infighting, court battles and mountains of debt.

"If nothing else, this has been an education," pediatrician Martin Borenstein, MD, said ruefully.

Dr. Borenstein, who left Meyer in July to start his own practice, put in a claim for $220,000 of unpaid salary and benefits.

Meyer's president, pediatrician Michael DeStefano, MD, blames HMOs, particularly BlueCross BlueShield of Illinois, for his group's troubles. According to U.S. Bankruptcy Court filings, the Blues represented about 75% of the group's $40 million-plus annual revenue. Dr. DeStefano said the Blues' capitation payments -- quoted in court documents as $40 per member per month -- were insufficient. In court documents, Meyer said the practice would need $60 per member per month to break even. Citing complaints from specialists who hadn't been paid for Meyer referrals, the Illinois Blues terminated its contract with Meyer effective July 31. [...]