Finding the right physicians is a crucial first step in ensuring a successful PHO, and depends on a number of factors, including the size of the population you want to serve, explains Travis Ansel, MBA, manager of strategic services, and Greg Mertz, MBA, FACMPE, director of consulting operations, for the Healthcare Strategy Group.
Who are the right physicians? It doesn’t make any difference what their employment status is. One of the things that hospitals looked at when they first got into the employment business was, ‘Who are my high admitters? Who are the guys that bring a lot of business to me?’ They might not be the right folks. I was talking to one hospital CEO who said, ‘I’ve got two cardiology groups: one group drives a ton of business into the hospital. The other one not nearly as much, but I suspect that the low volume people are the right people in the coming years.’ That might be true, but it’s time to take another look at everybody in the market.
How many people do you intend to serve? If you don’t have enough primary care physicians, you can figure that a primary care practice with a single practitioner can control 1,500 to 2,000 patients. How many do you need? Are they spread throughout the geographic area? Is it going to be attractive to an employer to say, ‘You cover where all of my employees live’. There’s got to be right sizing; if you’ve got hundreds of physicians, the savings that’s going to be shared may even be insignificant. They may not be interested.
The message from the old independent physician association (IPAs) and PHOs was, ‘I’ll try and negotiate a fee, which is higher than I get now, but then everybody gets to decide whether or not they want to be in or not.’ This model says, ‘If the PHO goes and negotiates a deal with an employer or payor, everybody within the PHO automatically is in that plan.’ So it’s much more restricted.
Everybody’s got to be a team player; everybody’s got to believe in what’s going on. I talked to a number of the accountable care organization (ACO) applicants that were approved this past year and the biggest thing they said was, ‘It isn’t development of the infrastructures, it’s not putting the governance together, it’s creating the culture, finding the people that believe that this is better than the alternative.’ That’s going to be the key thing really changing behaviors.
As I said with any payor contract, every PHO member is bound by the contract. You’re not negotiating rates. Now you’re back on the wrong side of anti-trust, you’re negotiating incentives. If we do the following, if we meet these objectives, if we hit these clinical targets, then we get X, whether it’s shared savings, whether it’s clinical incentives, and it has to be measureable, whether it’s cost, whether it’s patient satisfaction. There has to be data points that you can collect and report on. That’s what’s going to drive the revenue.
Essential Guide to Physician-Hospital Organizations: 7 Key Elements for PHO Success describes the seven critical areas of PHO development, from defining the PHO mission to creating a data environment conducive to registry use, analytics and active patient management.