MEDPARTNERS: The End Of PPMs?
"Analysts, shareholders and doctors spent Wednesday wrestling with the" announcement that MedPartners Inc., the nation's largest physician practice management company, will abandon its PPM business over the next 12 months. The Birmingham News reports that Birmingham, AL-based MedPartners "spent the hectic day answering questions" about the decision to terminate its unprofitable physician business and refocus its efforts on pharmaceutical services. Although the announcement has left numerous practices unsure of their next move, analyst Frank Brown of Sterne, Agee & Leach "said the decision to divest its practice management operations may have been the best option MedPartners had." He explained, "MedPartners probably looked ahead three years and realized it could still be in the exact same position ... trying to solve its PPM problems with its stock sitting at between $4 and $5 per share." MedPartners CEO Mac Crawford said the company has received word "from interested potential buyers," but declined to reveal specifics. The information prompted Brown to speculate that an offer from Phycor Inc. "would be ironic ... as it was a failed merger attempt between MedPartners and Phycor that triggered the tumble of such companies during the past year." MedPartners' announcement "signaled that it has little faith in the ability of the [PPM] industry to return to its highs of a year ago," and analysts remain similarly wary. Brown predicts, "The jury is still out on the PPM industry. Phycor is one of the last remaining companies believing it can add value. ... They are in the position now to become the nation's largest PPM" (Tomberlin/Gerome, 11/12).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.