Dr. Scullion says these investor-driven companies will have a larger footprint in the coming years, as more practices come up for sale and investors partner with clinical leaders to launch more companies. “Healthcare continues to be sector where overall more investors want to be in than not,” he says.
He points to U.S. Oncology as an example of an already successful company with this business model and to Vantage Oncology as a recent arrival. Investors are also looking into orthopedic, spine and heart, he says.
Creating ‘focused factories’
“I see these companies as ‘focused factories’ for specialty care,” Dr. Scullion says. “They are involved in a narrow range of treatments. These are smaller, more nimble organizations than hospitals. Typically, hospitals have to deliver many different services and it’s very hard to standardize the organization.”
These new companies, he says, are quite different from physician practice management companies, which were also for-profit companies that bought up practices in the 1990s. Companies like PhyCor and MedPartners used Wall Street money to buy up huge swaths of practices, but they ultimately they were not profitable and they quickly went out of business or completely changed their business strategy.
Dr. Sculllion says the problem with the old PPMCs was that “they did not necessarily change what the physicians were doing.” Fifteen years later, as practice guidelines have become more generally accepted, “there is a more general discipline in terms of how medicine is practiced,” he says.
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