Physician Practice Management Case Study

Physician practice management (PPM) firms in the late 1980s through early 1990s promised to provide needed capital, cost savings, increase revenues, and improve management. They promised physicians they could negotiate better contract rates with emerging PPOs and HMOs. With increased managed care, medical group/physician organizations experienced lower net revenues and increased costs (Burns, Bradley, & Weiner, 2011). PPOs and HMOs required larger discounts from the physicians. PPMs with a lot of capital purchased many consolidated independent practices, prestigious medical groups, and bought staff clinics which were divested by HMOs. Soon with the consolidation of PPMs three large companies were the only ones left in the early 1990s.

In their agreements with PPMs the physician practices had to sign a thirty to forty year management service contract. In the contract it specified after all expenses for the clinic were paid the revenues would be split between the physicians and PPMs. With lower cost of capital, centralization of purchasing, and having leverage with insurance organizations the result was supposed to be increased revenues and lower costs (Burns et al., 2011). Phycor, Inc., by 1995 became a company which managed many specialized
Their budgeting and strategic planning focused on revenue enhancement, expense reduction and cost containment. The company entered into national purchasing agreements, negotiated management care contracts, and conducted studies on procedure coding, productivity, also charging (Burns et al., 2011. They assisted in physician recruitments and maintained the computer systems for all functions of the practice such as scheduling and accounting. The company offered quality improvement advice on patient care by measuring the maintenance of performing standards by collecting and reviewing patient