Procter & Gamble Buys into Boca Concierge-Medicine Firm

By Phil Galewitz, The Palm Beach Post, Fla.

Jan. 9–The company that sells Tide detergent, Pampers diapers and Ivory soap bought a stake Monday in Boca Raton-based MDVIP, the nation’s largest concierge-medicine firm.

The Procter & Gamble Co. (NYSE: PG, $63.64), the world’s largest maker of household products, will be a minority owner of privately held MDVIP. Terms of the deal were not disclosed.

“This will enable MDVIP to take advantage of the phenomenal marketing talents and research capabilities of P&G to help us improve our message to prospective patients and doctors,” said Darin Engelhardt, MDVIP’s general counsel and chief financial officer.

In 2001, MDVIP was among the first companies to break into the field of concierge medicine. The company charges patients a membership fee of $1,500 a year in order to get more personal attention from doctors, including same-day appointments, lengthy physical examinations and even their physician’s cellphone number.

MDVIP has 136 doctors nationwide, including 32 in South Florida and 16 in Palm Beach County. The company added 46 doctors in 2006. Overall, MDVIP has about 50,000 patient members.

P&G, which had sales of more than $68 billion in 2006, says it invested in MDVIP because it likes the Boca Raton company’s business model and it meets P&G’s vision to improve consumer health. Further, P&G hopes to leverage its marketing prowess to help MDVIP add more doctors and patients.

“It has become very clear to us that they have created a unique and very compelling health care services model,” said Nathan Estruth, general manager at Cincinnati-based P&G. “This partnership creates value for both companies by leveraging our individual strengths.” The deal also could provide P&G another avenue to push its many health products, which include the over-the-counter ulcer drug Prilosec and prescription drugs such as the osteoporosis pill Actonel, said Ivan Feinseth, a New York-based analyst with Matrix USA, an institutional research and brokerage firm.

Other health-related P&G products include the fiber supplement Metamucil, ThermaCare HeatWraps and Nyquil pain reliever.

“P&G hopes MDVIP doctors will tout their products,” Feinseth said Monday. “It’s a form of consultative marketing.” But Terry Loftus, a spokesman for P&G, said Monday’s deal has “nothing to do” with selling its products.

“This is about improving lives,” Loftus said.

A MDVIP spokeswoman said the deal is not designed to have its doctors promote Procter & Gamble products.

P&G becomes the second institutional investor in MDVIP. The other is Boston-based Summit Partners, a private equity firm that bought a minority stake in 2004.

Although MDVIP has grown rapidly during the past few years, the concept of concierge medicine remains controversial.

When doctors transfer their medical practice to MDVIP, they typically slash their numbers of patients from more than 2,500 to about 600. Although that gives doctors the financial freedom to spend more time, the membership fee turns off some existing patients and smacks of greed to others.

Engelhardt said MDVIP is always looking for a better way to communicate with patients and doctors. It plans to work with P&G to enhance its public image.

The U.S. Government Accountability Office concluded in 2004 that the concierge-medicine trend was not harming patients’ access to doctors, mainly on the basis that concierge medicine is not widespread. The American Medical Association considers concierge practices ethical if arrangements are made for existing patients who choose not to participate.

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