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Clinic's partner in peril Facility in Portland loses docs; could affect Medford By SUSAN JAY The Medford Clinic's financial future is still unclear. Clouding the picture is troubled HealthFirst Medical Group in Portland, where nearly 50 percent of its doctors -- 60 physicians -- have resigned in the past few weeks. HealthFirst is a partner in Physician Partners Inc., a doctors management corporation that also includes Medford Clinic and Corvallis Clinic as partners. PPI formed in 1997 to give the clinics more financial and management resources. It borrowed an estimated $8 million from U.S. Bank. Also, First Union Capital Partners of North Carolina became preferred stock shareholders, investing $15 million in the PPI. "We're linked at the hip," said Medford Clinic's Dr. Bruce Van Zee, chairman of the PPI board. "What affects one of us has the chance of affecting the others." But, PPI and Medford Clinic officials say, there is no truth to rumors swirling in the health-care industry that HealthFirst or PPI is filing for bankruptcy because of HealthFirst's troubles. Not only is that rumor not true, they say it's not one of the strategies being discussed for Health First or PPI. "Right now, it's not one of the alternatives we're looking at," said Mark Charpentier, president and CEO of PPI. "The fact is, everyone (outside PPI) is saying bankruptcy, but we're not thinking bankruptcy," Charpentier said. Here's why: PPI has good relations with its largest capital investor and is talking to that backer about other financial arrangements for the Medford and Corvallis clinics, Charpentier said. The group also has enough assets to continue paying on its debt. Charpentier said one of the management group's top priorities is to "insulate and protect" the Medford and Corvallis clinics from HealthFirst's problems and financial responsibilities. Last week, Medford Clinic told its employees it would trim 82 positions to make up a $2.5 million budget shortfall. Van Zee said that action was unrelated to HealthFirst's problems. Charpentier said he would work to protect the Medford and Corvallis clinics. "My main concern is that Medford Clinic and Corvallis Clinic be able to continue the tradition they have had for the past 50 years," he said. "We're thinking it's pretty likely they will be able to. We're pretty confident that something can be worked out (with the investor)." But Charpentier added, there can be no guarantees. Charpentier said he believes whatever needs to happen with PPI and HealthFirst will occur in the next 30 to 60 days. HealthFirst also has several strategies it is pursuing right now, he said. Van Zee said HealthFirst, the largest partner in PPI, has four several months sought a way to leave the group, pay it what it owes and buy back its assets. The company had been working on a deal with Legacy Health System, but that fell through. Now, HealthFirst has been approached by several health-care players in Portland who are interested in a variety of financial arrangements to help the physicians at HealthFirst continue to practice in Portland, Charpentier said. HealthFirst was formed in early 1996 as the result of a merger between Metropolitan Clinic P.C. and Suburban Medical Clinic P.C. It then had 128 physicians. Even though doctors are handing in their resignations, HealthFirst continues to pay its bills, its doctors and its employees, Van Zee said. It is the intent of the Medford and Corvallis clinics to stay with PPI, Van Zee said. "Our plan is still to go forward with Corvallis and Medford in Oregon, with PPI serving both clinics, not focused on growth or going public but on operating synergy in both clinics." Today's Business Index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA