From Critical Condition: How Health Care in America Became Big Business and Bad Medicine -- Anatomy of a Systems Failure

Donald L. Barlett, James B. Steele

In This Article

Excerpt: Critical Condition: How Health Care in America Became Big Business and Bad Medicine
By Donald L. Barlett and James B. Steele
Copyright 2004
279 pages
ISBN: 0-385-50454-3
Price: $24.95

Doctor C's Empire

It is safe to say that few MedPartners patients had ever heard the name Kali P. Chaudhuri when state and bankruptcy officials began grappling with the thorny question of what to do with the collapsed provider. A pathologist by training and an orthopedic surgeon by trade, Dr. Chaudhuri was an American success story. According to published accounts and medical professional records, he was born to a wealthy family in India, earned a medical degree in Calcutta, emigrated to the United States by way of Newfoundland, worked at a small hospital in Coudersport, Pennsylvania, and in 1984 settled in the Riverside County town of Hemet, about ninety miles southeast of Los Angeles. With a population that would nearly triple to more than 60,000 by 2000, Hemet was becoming a magnet for immigrants from India, Taiwan, and other Asian countries, as well as home to a growing Hispanic population.

At first glance, Dr. Chaudhuri, or "Dr. C" as some called him, appeared to be a worthy successor to MedPartners. Starting from scratch, he had built a thriving orthopedic practice and served as chief of staff for Hemet Valley Medical Center. He taught orthopedic surgery at nearby Loma Linda University Medical School. The California State Senate cited him for his exceptional fund-raising efforts on behalf of a local hospital. He hosted political fund-raisers at his home. He was a pillar of the community.

Along the way, Dr. Chaudhuri evolved into a medical entrepreneur. He organized a physician management company serving thousands of Hemet-area patients. By 1999, he had built a miniconglomerate, called KPC Global Care, that managed physician practices and served 200,000 patients in the Inland Empire, the rich agricultural basin in Riverside and San Bernardino counties. He also had become a millionaire many times over.

If those state officials searching for a successor to MedPartners had looked more closely, they might have realized they were replacing one smooth operator with another. By all accounts, Dr. Chaudhuri was a charismatic figure, far more so than Larry House. Like House, he gave the impression that he understood the business of health care. He said all the things doctors wanted to hear, although many never seemed to notice that he practiced what he preached against--"for the last ten years, doctors have been bought and sold in the market like chickens." Like House, his self-professed mission was to free doctors from the drudgery of paperwork and the health care bureaucracy so they could do what they do best--practice medicine. "I don't want to sound like Mother Teresa," Dr. Chaudhuri told a local newspaper. "I believe that if you do what is right, success and money will follow."

It sounded good. Except at the very same time state officials were supporting Dr. Chaudhuri's bid in Bankruptcy Court to take over the MedPartners practices, a management company he co-owned, Valley Health Care Management Services LLC in Hemet, was engaged in some serious cost-cutting at the Hemet Valley Medical Center, a 240-bed, full-service, acute-care hospital.

The Chaudhuri company froze the longtime pension plan and replaced it with a far less favorable one that required employees to wait six years to be vested--no matter how long they had worked there. It slashed sick days from eight to five. It canceled pay for jury duty and eliminated a bonus plan. Not surprisingly, the changes triggered an all-out labor war, with nurses staging repeated walkouts. During demonstrations, they carried signs singling out Dr. Chaudhuri for his role in the cutbacks: "Please don't let the hospital go down the drain like most of KPC's enterprises."

Many of the hospital's nurses quit at the worst of all possible times. The dispute coincided with a severe nursing shortage, and those nurses who left had to be replaced by temporary workers. Ultimately, they would cost more than the savings from the cutbacks. Looming on the horizon were conflicts of interest involving Dr. Chaudhuri's growing private medical organization and the publicly owned hospital.

Nonetheless, in September 1999 Dr. Chaudhuri orchestrated the biggest deal of his life. A large piece of the MedPartners California branch was transferred out of Bankruptcy Court and into his KPC health care empire. Dr. Chaudhuri's initials or name were stamped on many of the corporate entities, from the umbrella company, KPC Medical Management Inc., to individual clinics, like the Chaudhuri Medical Group of Long Beach/Artesia Inc. Dr. Chaudhuri was the sole shareholder and chief executive officer of most of the businesses. In some cases, he was the only member of the board of directors. In addition to the medical practices, his health care conglomerate also included companies that owned real estate, like TROL Realty LLC, MFH Realty LLC, and Montclair Realty LLC. Later, there would be talk that money moved mysteriously among the many businesses. For the time being, he was quite simply California's most imposing medical entrepreneur.


Comments on Medscape are moderated and should be professional in tone and on topic. You must declare any conflicts of interest related to your comments and responses. Please see our Commenting Guide for further information. We reserve the right to remove posts at our sole discretion.
Post as: