PHOs first came into existence back in the ’80s when hospitals were trying to find a way to link up with physicians. 

At that time, physicians also created IPAs or Independent Physician Associations which were designed to help them negotiate in a leveraged way with what were becoming larger and larger managed care corporations.  Most of these faded into the sunset during the next several years as their utility and value became less and less; however, a few of them were able to continue.  We have such a PHO in Memphis -- one that has been in existence since 1985, called “Health Choice” as well as an IPA called “MetroCare.”

As stated, these initial PHOs focused on contracting.  They would set up contracting with large managed care payers and use what was called the “messenger model” to share this information with individual physicians.  Unless financially or clinically integrated, it is illegal for them to negotiate on an individual basis for its physician members, however, they can messenger out fees and let physicians directly negotiate through them with managed care companies.

Physician Hospital Organizations such as Health Choice also provide an integrating function between the hospital, payer, clients, and physicians.  In this model, aside from the contract issues described above, they often get involved in solving claims issues and coordination issues between the above-mentioned entities.  They may also provide a credentialing function.

Many newer concepts are evolving through this integration model.  One is education and teaching of various office procedures and compliance standards to physician’s practices.  This provides economies of scale with an education function that can be done locally.  PHO’s can also help as an integrating point to sell discounted insurance to its members, enhance broker and community relationships, and provide an organized buying center to receive discounts on various goods and services. Additionally, in these new times, they may act as a central focus and learning vehicle for all of the new healthcare information technology concepts that are coming to the market.

As the new world evolves, PHO’s are starting to reform to act as a vehicle for new care delivery models which require integration of care and alignment of services.  In this concept, PHOs are often the cornerstone of formation of accountability or ACOs (Accountable Care Organizations).  They can become organizations that deal with risk-based contracts or performance-based contracts.  They can act as centers for bundled payments and other concepts where fees are given in one large bolus that needs to be divided among the physicians, hospitals, and other health care providers.  Another new and important critical function can be how information is shared between the hospitals and practices.  Since this is a critical piece of integration, PHOs are in a perfect position to help organize and orchestrate these initiatives.

There will be countless new initiatives moving forward as the criticality of integration become a reality in healthcare and PHOs are in the perfect position to advance these goals.

Presented in partnership by Health Choice, LLC, and Memphis Medical News

www.myhealthchoice.com

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