SynerMed, a Southern California-based physician management company, will be shutting down, per an email from its CEO earlier this month. Recently, the company had come under increasing scrutiny by health plans and California state regulators, including an investigation by the Department of Managed Health Care.

According to the company-wide email, audits conducted by health plans had found “several system and control failures within medical management and other departments.” Additionally, the California Department of Managed Health Care’s investigation has been publicly acknowledged, although the details of such investigation remain confidential.

SynerMed has played an important role, coordinating services between health plans and physician practices, as well as insurance contracting, payment of claims and other administrative tasks for independent practices. The unwinding will begin immediately, with the company transitioning clients to another management firm within the next 180 days. As more information emerges from the investigation and audits, SynerMed’s abrupt closure will provide important lessons for medical management companies and Department of Managed Health Care-regulated entities.