Physician Practice Management Organizations: Their Prospects and Performance

Abstract

As physician organizations adapt their incentives, processes, and structures to accommodate the demands of an increasingly competitive and performance-sensitive external environment, the development of more effective administrative and managerial mechanisms becomes critical to success. The emergence of physician practice management companies (PPMCs) represents a potentially positive step for physician practices seeking increased economies of scale through consolidation, as well as enhanced access to financial capital. However, economic and finance theory, coupled with some empirical “arithmetic” regarding the financial and operational performance of leading publicly traded PPMCs, suggest caution in one’s forecasts of the future prospects for these evolving corporate forms.