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ONLINE DOCUMENT: DOCTORS SELL PRACTICES TO CORPORATIONS, HOPE TO EVEN SCORE WITH HMOS

Thousands of doctors beleaguered by tightfisted and domineering HMOs are scrambling to sell their practices - but they're not giving up on medicine.

They're selling out to savvy entrepreneurs who promise to pay them a lucrative salary, deal with the HMOs and other office hassles, and offer medical innovations to make them more efficient.These promises have created an entirely new industry in five years: physician practice management.

That may sound like a boring class for first-year medical students, but they're not yawning on Wall Street.

At least 22 of these companies have sold new shares to the public since 1991 and their stocks have risen an average of 111 percent, says Prudential Securities. Annual revenues for the companies are growing about 40 percent.

Advocates say the business is putting doctors back in charge of medicine by freeing them from the time-consuming business side - which they're no good at, anyway.

"They're free to spend the vast majority of their time seeing patients," said Brooks O'Neil, an analyst with the securities firm Piper Jaffray in Minneapolis.

However, consumer groups are worried that the doctors may simply be trading one corporate overseer for another.

"There are some health maintenance organizations out there that are mission driven to provide health care. That's what they're about. But there are also some HMOs driven by the bottom line and I would have the same concern about the physician practice management groups," said Peter Lee of the Center for Health Care Rights in Los Angeles.

Profits are, of course, the driving force behind the industry growth, which now includes a series of mega-mergers as industry leaders seek to establish nationwide coverage.

On Tuesday, the No. 1 company, Birmingham, Ala.-based MedPartners-Mullikin Inc., announced it would pay $2.5 billion for the No. 2 firm, Caremark International Inc. of suburban Chicago, creating a group with 7,249 doctors, mostly in the South and West.

The rise of this industry results mostly from the decline in physician income caused by the HMOs.

HMOs promise patients comprehensive health care for a prepaid monthly premium. They often pay doctors the same way - a flat monthly fee per patient, sick or healthy.

This creates an incentive for doctors to keep their patients well, but if too many get sick, the doctors are pressured to unduly restrict treatment, or risk losing income.

The HMOs also require doctors to document the need for expensive drugs and treatment, creating paperwork and administrative headaches and further cutting doctor income.

Since the vast majority of doctors still work in one- or two-person practices, they have no bargaining clout with the HMO.

Physician practice management companies create larger doctor groups that can negotiate higher fees from HMOs, relieve the doctors of scheduling, payroll and billing, and supply them with medical technologies to improve and track patient health.

They pay the doctors a salary, and usually give them an ownership stake in the group as an incentive to be efficient and generate higher profits.

Like HMOs, practice management companies have guidelines for treatment, but advocates say the difference is their guidelines are established and enforced by doctors who are just as concerned with good care as profits.

Skeptics point out that, no matter who is in charge, the pressure to maintain profit growth is intense.

Indeed, investors have already shown their willingness to abandon companies that don't meet Wall Street's profit expectations.

In the past year, disappointing quarterly earnings reports caused huge stock selloffs at three industry leaders: Coastal Physician Group Inc., Pacific Physician Services Inc. and AHI Healthcare Systems Inc.

Critics fear these shareholder crises could prompt managers to order the doctors to slash costs in ways that will hurt patients.

Michael Sparer, a professor of health policy at Columbia University, said it's too early to tell if physician practice managers will harm or help the practice of medicine.