A Mega-Merger Among Physicians
Executive Summary
The proposed merger between PhyCor and MedPartners illustrates one of the most interesting phenomena for suppliers in the changing health care delivery scene--the growing clout of organizations created to give physicians more power in deciding where and how care is provided.
In the early 1980s, the merger of two Nashville-based hospital systems, Hospital Corp. of America and Hospital Affiliates International, caused a stir by bringing together two of the leading exponents of what was at the time a relatively new concept: hospitals banding together in groups.
Last month's merger of another Nashville-based group with a national competitor could eventually prove just as seminal. The providers this time aren't hospital systems, but physician groups—specifically, physician practice management (PPM) giants Phycor Inc. and MedPartners Inc.
The deal comes as interest in PPMs is booming. For suppliers, PPMs could emerge as every bit as critical a customer group in the next decade as hospital groups have been over the past two. (See IN VIVO, Dec. 1996.)
But there's a difference between PPMs today and early hospital groups. While hospitals came together to create more competitive players in a changing hospital industry, the PPM deal isn't a positioning against other physicians. Rather, the rationale for the deal is to give physicians sufficient clout to negotiate as equals with other players in the health care system, including market leading managed care groups, employers, and hospital systems.