PPM/MSO News

• Magellan Health Services (Atlanta) reported $54.9 million in revenues in 1Q99 ended Dec. 31, a 97% increase over $27.9 million in 1Q98. Net income was $5.3 million, 17 cents per share, in 1Q99, compared to $6.2 million, 21 cents per share, for the previous 1Q. During 1Q, the company paid its revolving credit line down $40 million.

• Medical Group Management Association (MGMA; Englewood, CO) and Medimetrix (Cleveland) found that only 11% of hospital/health system’s surveyed are breaking even, according to their Management Services Organization Benchmarking Survey: 1998 Report Based on 1997 Data. The recently published survey also found the following: hospital-owned physician practices were losing in excess of $50,000 per full-time physician per year; 8% of gross charges came from capitated Medicare; and the median total net medical revenue per physician was $254,050. "As the industry learns from its past successes and mistakes, it will restructure around models that focus on the alignment of physician and health system incentives," said Medimetrix President/CEO Dr. Joseph Davis. The survey can be purchased for $200 through the MGMA service center at (888) 608-5602.

Fortune Magazine has named Medpartners (Birmingham, AL) one of America’s least admired companies, ranking 467 out of 469 companies analyzed, for scoring poorly on financial soundness, use of corporate assets, keeping talent, social responsibility and long-term investment value. The company’s score dropped 40.53% - more than any other company – over the previous year. Medpartners plans to sell its seven physician practices within four months, a decision made following its announcement to get out of the business. The sales should generate about $550 million, which will be used to pay off debt, Piper Jaffray (Minneapolis, MN) analyst Brooks O’Neil told Dow Jones News Service. In FY98, the company’s revenues were $2.6 billion, compared to $2.36 billion in FY97. The company reported a net loss of $1.26 billion, $6.64 per share, in FY98, compared to a net loss of $820.6 million, $4.33 per share, in FY97. Medpartners has also announced the election of two new directors to its board, James Dickerson and Kristen Gibney. Dickers is the executive vice president/CFO of Medpartners, and Gibney is the former president of Caremark Prescription Services Division.

• Physicians’ Specialty Corp. (Atlanta) acquired Preferred Diagnostic Services (Atlanta) on Feb. 1 for an undisclosed price. The two companies had entered into an exclusive contract agreement in September. Preferred Diagnostic operates 12 sleep laboratories in Atlanta suburbs.