Evolution of Physician Organization Under Managed Care

How and why are Physician Practice Management (PPM) Organizations forming? Investigators at University of California, Berkeley analyzed the growth and evolution of Physician Practice Management organizations. PPMs are management organizations which perform credentialing, contracting, utilization management and quality assurance to physician groups, which in turn contract with HMOs or other organizations to receive premium payments. The researchers studied PPM’s internal operations and their contractual relations with health insurance plans between 1998 and 2000. Case studies were conducted of all major PPMs and their associated health plans in the mid-Atlantic states and in California. The case studies collected quantitative data on PPM physician affiliations, patient enrollments, and financial performance, and qualitative data on corporate structure, strategy for mergers and acquisitions, physician compensation and methods of utilization review and quality management. Similar data were collected on their contracted health insurance plans. The objective of the study was to inform policymakers about these new organizations and whether regulations are needed that address consumer protection, solvency, quality, and antitrust issues, and how these entities might function in the Medicare program as Provider Sponsored Organizations.