Physician practice management companies are gathering enough doctors and patients to start making a move into the clinical trials business.
The extra revenues available from testing drugs and medical devices is only part of the reason PPMs are getting involved in clinical trials. They also figure that participating in clinical trials makes them more attractive to physician groups looking for a company with which to affiliate.
"There's a lot of physicians that want to be in research, like they were in medical school," says FPA Medical Management spokeswoman Angela Rivera.
At this point PPMs are a small factor in the $2.5 billion clinical trials contract-research business. But their involvement is expected to grow in coming years.
San Diego-based FPA, the third-largest PPM measured by revenues and physicians, this year plans on assigning clinical research to 100 of its 7,000 doctors as part of an agreement it signed with Nashville-based ClinTrials Research.
ClinTrials is part of a fragmented market of small to medium-sized companies that manage research for pharmaceutical and biotechnical firms.
ClinTrials will take a portion of the revenues gained by clinical research for its management, FPA will keep a cut, and physicians will get a slice. Specific terms have not been set, and doctors do not know yet what drug or device they will test.
The work will involve physicians seeing extra patients, but Rivera says the doctors who participate probably won't mind, since they're the ones who are clamoring to get into research.
West Palm Beach, Fla.-based PhyMatrix Corp. wanted to do more than just give its doctors access to trials. It wanted to control the whole clinical trials process.
To that end, PhyMatrix in October issued $100 million in stock to buy Providence, R.I.-based Clinical Studies, which in 1997 had an estimated $26 million in revenues.
One month later, Clinical Studies signed a deal with Organogenesis to test Apligraf, a human skin equivalent developed for the treatment of pressure sores.
PhyMatrix spokeswoman Lisa McAlister says the company expects Clinical Studies' revenues to grow 25% to 30% in 1998 to between $30 million and $35 million.
PhyMatrix also has a subsidiary called OncoMatrix that tests oncology drugs.
"The physicians like to be involved in clinical trials," McAlister says. "It's not only additional revenue, but it's prestigious to be involved in new drugs going to the marketplace."
Drug companies themselves also are taking their first steps in affiliating with PPMs, although major companies don't want to comment publicly for fear of looking like they have too much influence on what brand of pharmaceuticals a PPM would buy.
With PPMs growing larger, drug companies increasingly see them as "a strategic window on the market of their customer," says Douglas Goldstein, president of Alexandria, Va.-based healthcare consultant Medical Alliance.
"They want to demonstrate the efficacy of drugs in reducing overall healthcare costs," he says.