LOS ANGELES-It is the practice buyout of practice buyouts.
The $2.5-billion merger of MedPartners/Mullikin and Caremark International has created a management behemoth of 7,249 physicians.
The new company will cover 1.5 million HMO patients, 1.1 million of them in Southern California, where it will hold sway over 15% of all physicians.
"We have now formed the premier physician-practice management company in the country, with unparalleled depth and breadth of management and expertise in fee-for-service as well as prepaid markets nationwide," said MedPartners/Mullikin's Larry House, the new firm's chairman and CEO.
The No. 2, PhyCor, was dwarfed. The new MedPartners-Caremark expects revenues of $4.4 billion this year. PhyCor brought in $856 million in 1995.
The merger is the third for MedPartners in less than a year. In separate deals totaling $757 million, it bought Mullikin and Pacific Physician Services, both based in Southern California. Caremark had been vulnerable since it paid $161 million to settle a home-care kickback suit last year.
Though Caremark was the bigger firm, with pharmacy-benefit and disease-management businesses, MedPartners/Mullikin will control the new board, 9-4. MedPartners started as an orthopedic-practice manager in the South, Mullikin as a physician-run PHO here.
Physician-management companies have become investors' darlings, says Ken Bohringer, a Prudential Securities analyst, because doctors-with billings over $200 billion a year-are now perceived as the key to cost control in health care, just like hospital-management companies and HMOs before them. "The perception on the Street is that it's the doctors' turn," he says.
LOS ANGELES-It is the practice buyout of practice buyouts.
