California medical group back from bankruptcy

The San Jose Medical Group, which filed under Chapter 11 in September 2002, used cost-cutting measures to return to profitability.

By Mike Norbut, AMNews staff. June 14, 2004.

More than 18 months after it filed for Chapter 11 bankruptcy protection, a California physician group is going to do what most groups aren't able to manage: re-emerge intact.

San Jose Medical Group, a 75-physician multispecialty group with a wrap-around IPA, filed its reorganization plan in U.S. Bankruptcy Court last month, pledging to pay its creditors more than $4 million over the next four years. If creditors approve the plan, the group could be out of Chapter 11 by August.

The group filed the plan after recording 18 consecutive months of profit, turning around its financial position through belt-tightening and site consolidation. Cost-cutting measures were needed to counteract the loss of members and revenue the group suffered over the last few years, which hit the Silicon Valley particularly hard.

The group credits much of the turnaround to the bankruptcy filing, which let the group break some long-term leases. The group went from eight sites to three, saving $300,000 per year in lease costs, said Dean Didech, MD, a pediatrician and chief medical officer for San Jose Medical Group. "We looked at different options at the time, including merging with another group, Chapter 7 (liquidation) and Chapter 11 (reorganization)," he said.