Physician Practice Management Companies: 1980-1990's

Physician Practice Management Companies was a rapid growing field in the 1980-1990’s. They had a business plan that promised capital, cost savings, increased revenue, and better management for physician offices. They also promised the ability to negotiate great contracts with HMOs and PPOs. Due to HMOs and PPOs expecting large discounts, an increase in managed care, increase in budget, and lower revenues, the aspect of a PPM was very intriguing to many physician owned practices. Physicians would sign a 30-40 year management contract with PPMs and obtain a portion of the revenues after all expenses were paid. Capital, purchasing, and insurance leverage would mean lower cost and high revenue (Burns, Bradley, Weiner, & Shortell, 2012).

In 1995, PhyCor offered management to multispeciality clinics, contracts, independent practice associations, and decision support. PhyCor was offering for physicians to let them manage contract, purchasing agreements, recruitment, coding, accounting, billing, and scheduling. In return, they promised to promote growth, efficiency, strategic planning, cost containment, revenue enhancement, and expense reduction. They also offered physicians equipment, facilities, employees, and capital. Initially, PhyCor seemed like a contender within the PPMs. In five years, their revenue went from $1.2 million to $240 million. In 1994, PhyCor had purchased 22 practices, 1,200 physicians, and could be found in 15 states. This all came to a devastating stall in 1997, when it was noted of the inability to integrate smaller practices into larger ones. Within one year, PMMs stock prices fell by 64 percent (Burns et al,