The Medical Group Management Association is now the proud, 100% owner of its own data-mining venture.
The not-for-profit MGMA, based in Englewood, Colo., was the successful bidder on Physcape, the medical group practice financial data-mining joint venture it co-founded in 2001.
Physcape, formerly based in Charlotte, N.C., uses financial data gleaned from medical groups to provide productivity coding analysis and other financial reports for practice management guidance to its customers.
The company was formed in 2001 as a 50-50 joint venture between MGMA Services, a for-profit subsidiary of the trade association, and a consortium of small investors known as Enterprise Health Links.
Through a subsequent recapitalization, MGMA acquired an 80% stake in Physcape. The auction today in Colorado wiped out the partners' interest and makes MGMA the sole owner of the company.
MGMA bid "just a little over half million" dollars for the company, according to William Jessee, M.D., chief executive officer of the trade group. It was the only bidder.
"We paid the book value for the assets and the software," Jessee said. "It's a commercially reasonable figure."
MGMA had sunk $2 million into the venture through a secured line of credit, had an unsecured loan to Physcape of $450,000 and had somewhere between another $2 million and $2.5 million in capital invested in it, according to Jessee.
Several companies expressed interest, but many said they thought the company was more valuable with an MGMA affiliation than without one.
"We have about a half dozen companies interested in the assets, but it made more sense to just let us buy it. We're having in the next couple of weeks some pretty intense discussions with a couple of them about either buying it or having them as an equity partner in it."
"We expect things are going to move pretty quickly," he said. "We still have the Web site up, and the customers still have access to the data, but we're not taking up anymore data, so we don't want that hiatus to go on very long.
"It should happen in the next couple of weeks."