A for-profit subsidiary of the not-for-profit Medical Group Management Association has taken over direct control of its independent, for-profit data collection venture, Physcape.
Headquartered in Charlotte, N.C., Physcape provides through its PracticeProfiler product billing and coding benchmarking tools for group practice management, but not clinical outcomes information.
"We're basically looking at our options," said MGMA CEO William Jessee, M.D. "We thought we could run it more cheaply by avoiding some of the duplication of overhead."
Those could include selling out MGMA's interest in the venture or holding on to it and trying to make it profitable with a new partner.
"We started out as a 50/50 shareholder, then upped our position to 80%," Jessee said. "We've basically been its banker."
The data miner has about 130 customers, including integrated delivery systems and about 1,000 medical groups, and 150 million patient transactions on file.
Yet, as much as he likes the business, Jessee said the growth rate of customers was too slow to match the burn rate of losses for the association to keep funding it under the current structure.
The Englewood, Colo.-based trade association has invested roughly $5 million so far in the venture, launched in 2001 by MGMA's for-profit entity, MGMA Services, and a consortium of small investors, Jessee said. MGMA currently holds $2.5 million in direct and guaranteed bank loans to Physcape.
"Our pockets aren't as deep as Aventis," Jessee said, referring to a rival data-mine project of the American Medical Group Association of Alexandria, Va., which took an 85% stake in a for-profit joint venture it launched with Aventis Pharmaceuticals in February 2001. Late last year, that venture, called Anceta, announced it had signed long-term contracts with 10 multispecialty groups to gather data from 4 million patients to create a massive database of clinical and financial data with the goal of adding 15 to 40 more groups in three to five years.
Anceta recently signed a deal with Siemens Medical Solutions to provide information technology infrastructure to the venture.