Update to Medical Staff Regarding
HPR Chapter 11 Bankruptcy
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The recent announcement by Health Plan of the Redwoods (HPR) to file for Chapter 11 bankruptcy has understandably created some confusion and concern among patients and the physician community. We would like to summarize some key facts regarding this situation in order to communicate with you as accurately and honestly as possible.
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Capitation payments to all providers are expected to continue as usual
As some of you may know Sutter Medical Center of Santa Rosa, Sutter Warrack Hospital, and Sutter Medical Group of the Redwoods (through Sutter Medical Foundation - North Bay) presently have a global capitation agreement with HPR that extends through December 2002. This agreement is structured so that Sutter presently receives a monthly payment from HPR concurrent with extending hospital care or paying our physicians. HPR has previously been, and is currently up to date with their payments to us. We expect this to continue and HPR has indicated that they wish to preserve this relationship, allowing us to continue to pay all of our providers in a timely manner at the current contracted rates.
However, if HPR does not pay for the services pursuant to the contract, we have the option of requesting the bankruptcy judge to compel HPR to "assume" or "reject" the contract on an expedited basis. Usually the debtor does not have to elect to assume or reject the contract until the plan of reorganization is confirmed. If HPR assumes the contract, it must continue to perform all of its obligations and must pay all pre-petition debts. If it rejects the contract, the contract terminates, both parties obligations cease, and the pre-petition debts become part of the unsecured claims. The provider would then have a breach of contract claim against HPR, which would be an unsecured claim. We must remind you that all providers with contracts must continue to provide services pursuant to those contracts.
We plan regular talks with HPR and will be monitoring their post-petition progress closely. We will continue on-going communication with you, informing you of any changes, future plans, or key messages relevant to this situation.
If you have any further questions regarding this situation please call Donald Ransom, Ph.D., Associate Medical Director, at (707)573-5222.
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