The rise and fall of the physician practice management industry

The dominant view among academic economists is that the financial markets value financial securities "efficiently," in the sense that the prevailing prices of widely traded securities fully and properly reflect, at any time, all publicly available information that bears on these securities. Although that theory has great intuitive appeal, it requires intellectual effort to reconcile it with the rise and fall of the physician practice management industry. This paper explores how acquisition-driven firms are valued in the financial markets and what structural factors may stand in the way of truly efficient security valuation.