To the Editor:

I am currently doing locum tenens work in Australia, now broke and miserable after watching my stock in a physician practice management company (PPMC) go south. Due diligence does not guarantee that you'll find a PPMC with a sound financial picture (see “When a Physician Practice Management Company Comes Calling,” June 1998). For the thousands of doctors burned in the stock-market crash of FPA Medical Management, there was no possibility of uncovering poor accounting procedures and misinformation from FPA directors. Every business deal poses risk.

Any group considering amalgamation with a PPMC should negotiate an escape clause that protects against bankruptcy, fraud or failure to deliver on the business plan. The best bet is to sell only for cash, avoid any stock transaction and take out an insurance policy that prevents the individual physicians from losing a practice that was built with blood, sweat and tears.