California physician group management company to close amid heightened scrutiny

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SynerMed, a Monterey Park, Calif.-based company that manages physician practices across California, is shutting down.

The company is closing after audits by health plans revealed "several system and control failures within medical management and other departments," SynerMed CEO James Mason wrote in a Nov. 6 internal email, obtained by Becker's Hospital Review.

In the email to employees, Mr. Mason said due to the issues identified in the audits, a few "significant health plans" are telling SynerMed clients to contract with another management services organization. "Alpha Care Medical Group and EHS [Medical Group] have terminated their contract with us. I anticipate that our other clients will terminate their contracts with us as well," he said.

The company is closing all operations and attempting to transfer its clients to another firm within the next 180 days.

SynerMed is also facing scrutiny from the California Department of Managed Health Care. The agency confirmed it is investigating SynerMed, but told Kaiser Health News the details of the investigation are confidential.

SynerMed is a subsidiary of PAMC, Ltd., which also owns Los Angeles-based Pacific Alliance Medical Center. The hospital agreed in June to pay $31.9 million to the federal government and an additional $10 million to the state of California to resolve allegations it violated the False Claims Act, the Anti-Kickback Statute and Stark Law.

Pacific Alliance Medical Center is set to close Dec. 11. The hospital, which has provided care for more than 150 years, cited the costs of retrofitting its facilities to meet California's seismic standards as the reason for the closure.

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