Dire Prognosis

Buyer of four Tenet Hospitals leaves doctors fearful for Countys health-care future

"I play chess four or five moves ahead," said another doctor at odds with the physician-turned-businessman. "Chaudhuri plays 15 moves ahead. I don't often agree with his methods, but I'm always in awe of him."

In a recent interview, Chaudhuri dismissed criticism of him and the Tenet deal as "sour grapes."

"These doctors are understandably upset. They had their own offer. It obviously fell short. And I don't argue with their suffering under KPC," he says. "But why did it happen? [MedPartners] was already in a downward spiral and losing $10 million a month. What we accomplished there was a soft crash landing instead of a hard crash landing for everyone involved. It was beyond me to stop it. In that sense, I was a victim, too."

But in their book Critical Condition, Pulitzer Prize-winning investigative reporters Don Bartlett and James Steele paint a different picture of the clinics' disintegration under Chaudhuri. They recount reckless cost cutting, inept record keeping, patient dumping and loss of services due to unpaid bills that led to a medical "meltdown" resulting in discontinuity of care and, in some cases, the deaths of patients. "Nevertheless," Bartlett and Steele write, Chaudhuri "continued to put a positive spin on KPC, just as he had done from the beginning. Profitability was always just around the corner."

Chaudhuri sees the Tenet deal as a way to vindicate himself. He is, he believes, the right man with the right plan to turn around four hospitals. At the heart of that plan is something Chaudhuri calls an "integrated management model" that will give doctors quick access to medical information.

"I am not running; I am not hiding," he says. "If I have done something wrong, would I come back here? I am facing this head-on. I am answering all questions."

He acknowledges he's been involved in some 30 lawsuits but says he has "never lost a judgment."

When I ask him about Caremark Inc. vs. KPC Global Care, he says I'll have to speak to his attorney.

The Caremark case displays Chaudhuri's preternatural ability to ride the ups and downs of any business cycle. It was from Caremark, then doing business as MedPartners, that Chaudhuri purchased 81 clinics in 1999. In their lawsuit, Caremark says Chaudhuri never made even one payment on his $9 million promissory note to the seller. When KPC Global crashed and burned in November 2000, Caremark says it raced to retrieve its investment—but too late. By then, all 81 clinics were closed and $30 million in company assets had disappeared. Others closer to Chaudhuri had gotten there first—Tenet, lawyers and a few of KPC's high-ranking officials.

A bankruptcy judge subsequently awarded Caremark a $4.2 million judgment against KPC, by this time a husk of a company depleted of its assets. Chaudhuri offered to buy Caremark's judgment for just under $500,000. Caremark sized up its options and took the money. The move effectively made Chaudhuri a creditor against himself.

What happened to KPC Global's assets on the company's path toward insolvency may never be unraveled. Speaking to a Riverside Press-Enterprisereporter, the bankruptcy judge said his court was unable to track the many convoluted transfers of funds between what had been MedPartners and Chaudhuri's numerous companies.

The collapse of Chaudhuri's health-care empire continued to reverberate. KPC Medical Management and Chaudhuri Medical Corporation are tied up in bankruptcy court on a separate matter; 1,000 creditors are knocking on those doors. In late 2002, Bartlett and Steele report, Chaudhuri suddenly dumped the Inland Global Med Group, stranding another 50,000 patients and leaving 240 physicians with more than $6 million in unpaid bills.

Chaudhuri holds financial interests in various other enterprises in and outside the medical arena as well, including supply houses and real-estate firms that had dealings with his medical groups but were sufficiently insulated from attachment under bankruptcy laws. Even his sprawling Hemet estate is held in trust out of the reach of creditors.

Through it all, Chaudhuri keeps smiling, promising and projecting an image of optimism, success and mission. It's like watching Tony Robbins and Mother Teresa in one well-dressed evangelist. In one breath, he is "integrating doctors into the decision-making process" of his "ground-breaking" medical model. In the next, he is extolling doctors who stick to what they do best—treat patients—"and let the managers manage." He says his failures have only made him better prepared to succeed. He speaks of "rescuing his reputation"—but then says, "This is not about me, not my personal glory. I am only doing my part to reorder this system . . . to benefit the patient."

At the end of the interview, Chaudhuri asks me to "judge me by what I do, not by what I say."

"It's one thing to lose a restaurant, or a hardware store, or even a clinic in your community," says Dr. Jeff Kaufman, a board member at Western Medical and a leader in the doctors acquisition group. "But we're not talking about widgets here. We're providing life-supporting medical care out of these facilities for thousands of patients who need us to be here day in and day out. If a hospital folds, it's not just another failed investment to write off and move on. It's a real-life catastrophe for real, live people."

"I'm only one man trying to do his part," says Chaudhuri. "I'm not Gandhi, really."

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