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Affiliated Pathologists Medical Group, Inc. (APMG) was founded in 1998 with final legal documents signed on November 24, 1998. APMG was formed by the merger of Pathology Consultants Medical Group (PCMG) and Northland Medical Group. APMG also marked the transition from the partnership form of legal organization (PCMG) to a medical corporation (APMG). PCMG’s origin is traced to 1979 when San Pedro Pathology Medical Group (SPPMG) was formed. SPPMG was a partnership that originated with two former Harbor General Hospital–UCLA pathology residents who re-united in practice at San Pedro Peninsula Hospital (SPPH). Richard Ellis, MD, was established at SPPH and was joined by Alfred Lui, MD in that practice.

In the late 1970s and early 1980s, SPPH was an active, thriving hospital functioning at capacity of close to 300 beds. Because of the busy hospital based practice and the additional activity related to the start up of Bio-Diagnostics Laboratories (BDL) in 1980, two additional pathologists: Drs. Eric Glassy and Jerree Stroh joined SPPMG in 1981. In addition, pathologists in those times, derived the majority of their income from “Percentage Contracts” under which pathologists were paid a percentage of gross billings or later, of net collections. These financial arrangements certainly motivated pathologists to expand the hospital based revenue, but also had the unfortunate effect of allowing pathologists to ignore the actual value of their anatomic pathology services, since most of their income was derived from clinical lab charges. In the 1980s, percentage contracts disappeared. In addition, other dramatic events resulted in changes in payment to pathologists. These included Medicare’s cessation of clinical professional component billing payment, Diagnosis Related Groups (DRGs), Medicare’s change from charge based payment to a fixed fee schedule payment based in the Hsiao Resource Based Relative Value Scale (RBRVS), separation of global fees for anatomic pathology into professional and technical components, MediCal Czar and limited hospital contracting, Blue Cross Prudent Buyer PPO discounted fees, CLIA 1988, Fifth year pathology residency requirements, etc. The list is endless. None of these developments were financially advantageous to pathologists, thus survival and growth depended on creativity, innovativeness, hard work, and a bit of luck.

In this milieu, SPPMG was presented with the opportunity to expand its hospital based practice by assuming the contracts of two local pathologists: Dr. Jack Silverthorne at Los Altos Hospital and Dr. Jim Redwine at Bay Harbor Hospital. As a result of these opportunities, we decided that the “San Pedro” in “San Pedro Pathology Medical Group” was too limiting, so the name of our partnership was changed to a more generic, “Pathology Consultants Medical Group” or PCMG. Assuming the pathology contract at a hospital with the cooperation or invitation of the previous Medical Director was an excellent method of expansion. We soon, however, began to recognize that there were other growth possibilities available and when we had a chance, we began to respond to formal RFPs for pathology services. Primarily because of Dr. Glassy’s creative genius and energy, formal RFP presentations became one of APMG’s greatest assets with notable successes at Saddleback, Little Company of Mary, and Portland Adventist.

An interesting observation is that as time progressed, our organization of multiple pathologists and diverse locations came to be viewed as a positive factor, rather than a negative one. In the early years of PCMG, many hospitals wanted their own individual pathologist or pathology group and were resistant to that group providing services to other facilities. Now, the benefits of an organization with pathologists that have varied expertise is well recognized and serves as an asset for APMG.

The growth of PCMG/APMG, both in the increased number of pathologists and geographic expansion to multiple sites, increased the management challenges. Increasing the scope of the organization added complexity and required more sophisticated processes as the group changed from one with a few members in one location who communicated almost daily, to a group with multiple practice locations in which members went months or years without seeing or contacting other members. Development of more sophisticated management and decision making processes arose from the necessity of managing this increased complexity. These included formal partnership agreements with structured decision making procedures allowing decision making without the inimical delays of universal consensus; hiring of full time non-pathologist Administrator and Administrative Assistant; election of Board members and Group President; formal Board meetings; Strategic Planning Retreats; regular financial reporting via professional finance department; retention of outside legal counsel; and establishment of standing committees such as Recruitment and Compensation.

APMG continues to expand and thrive. Leadership responsibilities are now more evenly distributed. Yearly retreats (Advances) bring our members together to set priorities and build consensus. Task forces report on ACOs, technology, marketing, molecular testing, and succession planning. We truly believe we are the future of pathology.