Discussions are heating up between academic medical centers and physician practice management companies, which are trying to bridge their legal and cultural gaps for mutual profit.
PPMs offer a wealth of resources to help faculty practice plans compete for patients, including primary-care network development, risk experience, information systems expertise, capital, clinical databases, productivity-based compensation and patient-friendly touches.
Academic practices can offer their established market bases, prestigious brand names and clinical research expertise. In markets such as Boston, New York and Philadelphia, academic medical centers control huge numbers of physicians.
"For the physician practice management industry to grow effectively, there's going to have to be a relationship between them and the academic medical centers," contends Joseph Beck, a principal with Shattuck Hammond Partners, an investment banking firm that recently assisted the American Association of Medical Colleges in devising potential models for collaboration (See chart).
According to Shattuck Hammond, the few deals thus far include collaboration between Reston, Va.-based PHP Healthcare and the University of South Florida and between King of Prussia, Pa.-based Apogee and the Department of Psychiatry at Stanford University.
Several factors have kept the two sides apart. For one thing, PPMs have been busy lassoing independent physician groups. Also, many academic institutions have lacked the economic necessity to change.
More significant, some PPMs fear they won't be able to align faculty physicians with for-profit incentives.
Many academic medical centers want to maintain control of clinical operations, which provide nearly half their revenues and subsidize education and research.
Robert Dantuono, the AAMC's assistant vice president for healthcare affairs, said many academic medical centers have ruled out deals with the profit-driven PPMs, particularly those that involve selling practices.
"In state-owned schools there could be a legal barrier to creating a for-profit (practice). In others, there is purely a cultural barrier," he said.
Now, however, leading companies such as MedPartners and PhyCor are in active discussions with practice plans.
PhyCor manages a Chicago-area network that includes an independent practice association of faculty physicians at Chicago's Northwestern Memorial Hospital. It's negotiating with a half-dozen other academic medical centers to manage their faculty physicians.
"In some markets we may create an IPA of the faculty and then create other IPAs in the market and provide management support to all of those IPAs," said Paul Keckley, PhyCor's vice president of strategic development. "In others, we would look for ways to create a group practice beginning with the faculty practice plan and augmenting it with physicians from the community."
MedPartners is talking with academic medical centers that possess both strong clinical care and top researchers with whom it could collaborate on outcomes research, said John Gannon, president of MedPartners' Eastern operations. The way Gannon sees it, both sides need to generate surpluses from clinical operations.
"Our goals are very much in sync with the academic medical centers," he said.