Physician Practice Management: The Doctor is In

A new force of organizing care has begun to emerge designed specifically to restore to physicians the power and influence they've seen drain away. They're called physician practice management (PPM) companies, and they may be the hottest trend in health care. Recently, they've been among Wall St.'s favorite investments over the last couple of years. And they're beginning to attract doctors in large numbers.

Through the late 1970s and early 1980s, physicians seemed to occupy a protected position in the Federal battle against rising health care costs. Despite the central role they play in determining how and where health care is delivered, governmental cost containment efforts, starting under the Carter Administration, focused largely on hospitals, in part because the vast majority of health care resources are consumed there (wherever the decision-making ultimately lay). Indeed, the Government's major initiative, prospective payment based on diagnosis related groups (DRGs), specifically excluded the physician cost component from the reimbursement level.

Even where the role of physicians was acknowledged, hospitals and other players, such as payers, often seemed reluctant to challenge physicians precisely because of the importance of happy physicians to...

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