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A group of doctors band together to create their own private corporation. These businesses, being privately owned, have the luxury of not having to deal with the fiscal demands of stockholders and other investors. Thus, the doctors have the ability to use the generated funds to care for their patients...
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Yet with volume purchasing of gauze, needles, and other medicating implements, they are able to compete favorably with the
HMOs.
Part of the monies generated by HMOs is used to pay stockholder dividends; the demands of the investors must be met. In 1994 salaries and stock awards to the heads of the seven largest HMOs averaged $7 million each...
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