American Academy of Emergency Medicine

AAEM Responds to Failings of the PPM Industry

The October 5, 1998 issue of American Medical News contained a feature article entitled "Fleeing Disaster," which told the tales of several doctors working to break away from their physician practice management (PPM) firms. While the article accurately reported some of the latest trials to hit the industry—including FPA's bankruptcy filing and allegations of fee-splitting against PhyCor—from the EM point of view, it seemed to barely scratch the surface of the fraud and abuse with which the specialty is so familiar. Although the industry has been plaguing Emergency Medicine for years, it seems its negative effects are just beginning to be felt by other specialties.

In another attempt to inform the press of the dangers the PPM industry poses for physicians and the quality of their care, and to hopefully spark more investigation into their practices and the root of the problem, Dr. McNamara dispatched the following letter, which was printed in the November 23/30 issue.

To the Editor:

I am writing in response to the article entitled "Fleeing Disaster," detailing the experiences of several doctors trying desperately to break their ties with PPMs, which ran in the October 5, 1998 issue of American Medical News.

As president of the American Academy of Emergency Medicine (AAEM), a medical specialty society composed of board certified emergency physicians, I am unfortunately directly familiar with many of the firms mentioned in your article. The PPM industry is particularly entrenched in the specialty of Emergency Medicine and we are repeatedly contacted by physicians who are unhappy with their work situations.

In Emergency Medicine, many of their PPM employment contracts include non-compete clauses, preventing physicians from continuing to work in the community that needs them when the PPM loses its contract with the hospital. Worse, many emergency physicians employed by PPMs are denied rights of due process, and can be fired "without cause" with very little notice.

AAEM is also deeply concerned about the operating methods of PPMs and the risk to physicians of participating in fee-splitting. In addition to a percentage-based take of the physician fees, which the Office of the Inspector General (OIG) recently labeled as "suspect" for fee-splitting (OIG Advisory Opinion 98-4), the arrangements in Emergency Medicine often have the PPM receiving a portion of the physician fees above what one would consider "fair market value" for the services rendered. This creates further risk for the physician under the anti-kickback statutes at the state and federal level. Unfortunately, given the dominance of PPMs in Emergency Medicine, the physician often has limited options regarding such contracts.

As publicly-traded companies, the PPM industry also raises the specter of business decisions that could affect patient care in order to increase the bottom line. We are concerned that such companies may be induced to hire less qualified and less costly emergency physicians to lower their largest operating expense, the payment made to physicians, in order to maximize profits. As an organization, AAEM is committed to protecting the interests of both patients and physicians in regards to the PPM industry.


Robert McNamara, MD FAAEM
President, AAEM

AAEM remains dedicated to educating the medical and lay press of the special challenges facing the practice of Emergency Medicine today, as well as their impact on physician independence and quality of care. In doing so, it is our hope to gain the support of physicians from other specialties and the public at-large to bring about a new status quo in Emergency Medicine.