Health publisher expanding on Net

Physicians Practice Inc. is showing lots of signs of rapid change.

It got an infusion of $2 million in venture capital in the spring, enabling it to move ahead with plans for a strong Web presence to supplement its decade-old magazine, Physician's Practice Digest, and vault the company into the hotly competitive online health area.


It has grown from about 15 employees at the beginning of this year to about 25, and plans to have 45 on board by the end of the year.

It is moving in a few weeks from a cramped 2,000- square-foot office in Roland Park to a space five times as large in an industrial park near Baltimore-Washington International Airport.


It was ranked one of the "40 fastest-growing publishing companies" last month by the trade magazine Folio.

It even changed its name last month from Medical Communications Network.

But despite the dramatic changes, the explosive growth and the Internet angle, PPI doesn't view itself as a hot dot-com start-up. It sees itself as an established company with established customers expanding itself incrementally.

"We get teased a lot that we're not moving on Internet time, we're moving on health care time," said Scott Weber, a founder of the company.

"We're not raising money to do an Internet play," Weber continued. "What we're doing is a natural evolution of the company."

In fact, as venture capitalists look with increasing skepticism at dot-coms with no track record, "one of the things that made it a little easier to get financing is that we weren't just an Internet company," said Gerry Hartung, the company's other founder. "We're an ongoing publishing company that wants to add new tools to our business."

Hartung and Weber have been partners in a variety of publishing ventures over the past 15 years, including a travel magazine. At one point, they were working on a magazine for the state medical society, "and we identified the need for a practice management publication," Hartung said.

Launched in 1990 and initially distributed just in Maryland, Physician's Practice Digest tells doctors how to run the business side of their practices. Articles in recent issues, for example, covered managing cash flow, leaving large groups to return to solo practice, and the perils of negotiating flat-fee-per-member-per-month contracts with HMOs.


Doctors get the magazine free. It is sponsored, in each of about two dozen markets, by a large hospital.

PPI gets about a third of its revenue from sponsors, about a third from advertising (from medical equipment suppliers, malpractice insurers and others trying to reach doctors) and about a third from special projects. Each sponsoring hospital gets to insert four pages of news about itself into each issue.

Carol Bloomberg, director of marketing for Johns Hopkins Medicine, which sponsors the magazine for about 25,000 doctors in the mid-Atlantic region, said, "We chose it because it was a way to really reach out to community physicians."

It is those physicians who refer patients to Hopkins and other medical centers, and Hopkins seeks to encourage referrals with its local articles, such as the one in the May/June issue headlined, "Advances in Chronic Pain Management Can Benefit Your Patient."

Other sponsors include the faculty practice group at Yale University, Partners HealthCare (a Boston-area health system including Massachusetts General Hospital) and the state university medical centers of North Carolina, Ohio and Indiana.

Circulation has jumped from about 55,000 three years ago to about 135,000 a year ago, to nearly 200,000 now. Over the three years, revenue for the privately held company is up 40 percent, from $1.9 million to $2.6 million.


The circulation boost, said Hartung, gives the magazine a chance to go after another important segment of advertising to physicians - pharmaceutical companies.

The next expansion step for PPI involves an expanded Web presence. The existing Physician's Practice Digest Web site consists largely of articles from the magazine and links to sponsors. The revamped site would contains such features as live chats on medical management and online ordering of medical supplies. PPI is developing its Web initiative now for an expected fall launch.

It has formed a partnership with, an online provider of supplies for doctors (featured products this month: sterilizing solution, catheters and Steri-Strip skin closures).

When PPI's expanded Web site launches, it will be joining a chaotic battle to win space on doctors' computer desktops.

The battle is fierce because "the doctors control a large percentage of the health care dollar," by writing prescriptions, ordering tests, referring patients to specialists and admitting them to hospitals, said John Holton, chief executive of His 8-month-old company, which has headquarters in Silicon Valley, is one of the companies fighting for doctors' attention; it offers online scheduling of appointments.

Holton believes that there is room for skilled niche players like his company and PPI in the competition against do-everything Web sites such as Georgia-based Healtheon/Web MD. Healtheon is the behemoth of the field, acquiring a number of companies providing consumer health information and physician-oriented services. It's negotiating currently with a company that makes physician practice software.


"To do everything is very naive," Holton said. "Nobody is good at everything."

"Nobody's just going to hand this off to Healtheon," said Scott Rifkin, chairman of, which competes with Healtheon in the consumer health area.

Other big players, particularly insurance companies, are putting together Internet operations aimed at reaching doctors' desktops.

Michael P. Heffernan, vice-president of M. R. Beal & Co., a New York investment banking firm, thinks niche players - "mom-and-pop shops" - will have a difficult time.

"What's probably going to happen is that for the little guys to survive, they're going to have to partner with bigger guys," said Heffernan, author of three recent reports on online health businesses. To make those businesses work, he said, "you need a critical mass on the supplier side and a critical mass on the doctor side," and this is easier for large players.

PPI thinks it is well positioned. Weber said, "We're coming into this with a customer base of 200,000 physicians and 25 medical centers."


Rifkin, a former member of the advisory board to Physician's Practice Digest, said this is what has enabled PPI to attract capital. "The only people able to raise money now are those that have revenue other than advertising to consumers," Rifkin said.

Hartung added, "What we're seeing in the industry is the convergence of online and magazines. One plays off the other."