MEDPARTNERS: Will Shed Physician Management Business
In "the strongest sign yet of gloom" in the physician practice management business, MedPartners Inc., the nation's largest PPM, is expected to announce today plans to terminate its PPM business over the next 12 months, "shed[ding] its 238 physician clinics and more than 10,000 affiliated doctors." The Wall Street Journal reports that Birmingham, AL- based MedPartners plans to sell or "spin off to shareholders" its physician business and refocus its efforts on pharmaceutical services, which generate nearly $2.5 billion annually for the company. Caremark, MedPartner's pharmacy benefits management division, "produced 64% of MedPartners' earnings before interest, taxes, depreciation and amortization" this quarter. MedPartners also is expected to announce today disappointing third quarter net income results of $7.7 million, or four cents a share, down from $49.2 million, or 26 cents a share from a year ago. The Journal reports that sources familiar with MedPartners expect the company to post an 8% gain in revenue, to $1.74 billion, up from $1.61 billion last year. A source close to the company indicated that "MedPartners may seek acquisitions as the company transforms itself into a pure pharmaceutical- services and disease-management concern," because "it's the company's interest to grow." The Journal notes that the nation's largest PPM's abandonment of the market comes in the wake of similar announcements earlier this year from PhyCor Inc. and FPA Management Inc., as "each began disclosing losses or lower-than-expected earnings and difficulties integrating some of the physician practices" (Sharpe, 11/11).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.