By Emilie J DiChristina for PracticeFirst
As noted last month, physicians are facing increased pressures ranging from increased competition in the market, increased managed care penetration, decreasing reimbursement and increased paperwork related to the volume of exchange plans, etc.
As a result, there are many new types of organizations offering the potential to reduce some of the impact on physicians and their practices, including PHOs, MSOs, and more,
This month we briefly review the PHO. The PHO or physician-hospital organization is a joint venture between one or more hospitals and a group of physicians.
A PHO is usually a lower end stepping stone to MSOs, IHOs or Foundation models (which we will discuss in later months). The selling points to both physicians and hospitals which make the PHO an easier sell are:
- The ability for the parties (hospital and physicians) to present a united front to payers, particularly in the managed care arena. This allows for greater leverage when bargaining and negotiating contracts.
- The parties also come together to develop standards of care, standardization of equipment, formularies, implants, and sometimes even staffing models as a method of controlling cost and demonstrating value.
- There are shared services (supported financially by both parties) related to payer credentialing, quality, utilization management including care coordination – all taking pressure off of the physician offices to meet these requirements according to contract requirements.
- There is usually an IT services component as well, assisting all parties in aggregating the data necessary to meet requirements related to demonstrating value.
- Other than sharing services (for which there is shared financial risk), and presenting a united front to payers, each party to the PHO retains their autonomy.
Some potential downsides to the PHO include:
- To avoid concerns of antitrust, the PHO must entail significant elements of risk sharing for the both parties.
- Individual autonomy can result in roadblocks to agreements on standards of care, equipment to be used, and patterns of utilization reducing the PHOs bargaining power on value.
In summary, the PHO is often the starting point, and it does achieve the desired goals of increased bargaining power, increased hospital traffic to the hospital(s) part of the PHO, and certain operational efficiencies. It does not however offer the strongest corporate structures and shared risk/benefits of other models.
Look for more next mon