For sale: Colorado mining operation. Never profitable, but great upside potential for a hungry prospector. No mule required. Minimum bid: $2.45 million.
The Medical Group Management Association, based in Englewood, Colo., is placing its 3-year-old practice management data-mining business, Physcape, on the block at 10 a.m. Mountain Time April 16, but the trade group also plans to show up and join the bidding, its top officer said today.
Here's the lawyer language in a recent release: "The assets to be sold consist of all tangible and intangible personal property described as 'Collateral' in Security Agreements dated May 28, 2002, between Physcape Inc., as debtor, and MGMA Services Inc., as secured party. Collateral to be sold includes office furniture, furnishings, equipment; Physcape's interest in licensed software and related intellectual property; customer contracts; uncollected accounts receivable; any uncollected deposit accounts; and Physcape's database of customer information, subject to patient privacy restrictions."
MGMA Services is a for-profit arm of the not-for-profit trade group for physician medical group practice management.
Physcape, formerly based in Charlotte, N.C., uses financial data gleaned from medical groups to provide customers productivity coding analysis and other financial reports for practice management guidance. The company was formed in 2001 as a 50-50 joint venture between MGMA Services and a consortium of small investors known as Enterprise Health Links.
Through a subsequent recapitalization, MGMA acquired an 80% stake in Physcape, said MGMA CEO William Jessee, M.D.
Last month, the MGMA board of directors voted to take over operations of the company and the board is now looking to either sell it outright or assume 100% ownership at the upcoming auction in return for money loaned to Physcape by MGMA.
So, the company won't go dirt cheap, according to Jessee.
"Their debt is about $2 million in a secured line of credit, and another $450,000 is unsecured," Jessee said. "We probably have another $2 million to $2.5 million that we've invested in capital.
"We're prepared to bid the full amount of our indebtedness," Jessee said, adding that a purchase of Physcape by the MGMA at the auction was "a likely outcome" that would extinguish the ownership interests of the minority investors.
"But if there's somebody out there who wants to swoop in and offer $6 million for the company," Jessee said, the MGMA would probably let it go.
Jessee said Physcape was losing about $50,000 a month, but he thinks it could be brought to a break-even operation with less overhead under MGMA control.
Physcape counts as customers 130 organizations, many of them integrated delivery systems, involving 1,000 physicians groups. An IDS finds this data particularly useful, as it enables them to compare performances between their own medical practices and those outside the network, Jessee said.