PhyMatrix Corp., suffering through legal and stock market troubles, is exiting the physician practice management business.
The West Palm Beach, Fla.-based company's board voted Aug. 12 to divest any practice assets it owns. That involves about 375 doctors in multispecialty practices and affiliated diagnostic imaging, infusion, home health, lithotripsy and radiation therapy services. Buyout funds, disease management companies and PPMs are looking at buying some or all of the practice assets, says Abraham Gosman, PhyMatrix's chairman and chief executive officer.
"I don't think the market has any confidence in PPMs," he says. "There's no sense in going against the tide."
The divestiture would leave PhyMatrix with its clinical trials site management operations, its Dasco Cos. real estate development subsidiary, and 12,000 physicians for which it provides management services without actually owning their assets.
Margot Durow, vice president at Deerfield, Ill.-based Vector Securities, says PhyMatrix will use the clinical trials business as its core and leverage its physicians and real estate to augment the highly profitable operation.
The company's action also "simplifies (PhyMatrix's) story," Durow says. "It wasn't clear what the strategy was." Criticism over a lack of corporate focus has been leveled at Gosman for moving into the racetrack and hotel businesses with his medical real estate investment trust, Meditrust Cos. But Gosman, who resigned Aug. 5 as chairman and CEO of Meditrust, says the situations at the two companies aren't comparable.
After peaking at $17 per share last summer, PhyMatrix's stock has slid to about $5.
Like other PPMs, PhyMatrix has faced lawsuits from disgruntled doctors, and the company has responded with its own litigation against physicians who refused to pay management fees. Gosman expects all lawsuits to be rendered moot once PhyMatrix sells its PPM operations.