Predictors of PHO Longevity and Financial Success

Tuesday, April 15th, 2014
This post was written by Patricia Donovan

Today, value-based payment models encourage hospitals and physicians to work together and make each more accountable for the other’s actions in a physician-hospital organization (PHO). But what are predictors of PHO longevity and financial success?

Here, Healthcare thought leaders Travis Ansel, MBA, manager of strategic services, Healthcare Strategy Group, and Greg Mertz, MBA, FACMPE, director of consulting operations, Healthcare Strategy Group, debate the question.

Response (Greg Mertz): It’s pretty evident that no one entity is going to be able to meet the needs of the population. If you’ve got a hospital that employs physicians, there’s an excellent chance that the employed physician network isn’t the total answer for caring for the population. They’re going to have to embrace non-employed physicians, other specialties, larger based primary care. Some entity is going to have to be created to make that happen.

But the PHO is an excellent model. Basically, it creates a collaborative entity that can bring in hospitals, employed physicians, non-employed physicians, ancillary providers. The PHO this time is something that is going to be necessary. Value is inevitable. I don’t see any reason that it would not have great longevity.

Response (Travis Ansel): I definitely agree. I think the biggest predictor of long-term success is the culture, but it’s going to be how the governance of the PHO is set up. It’s going to be giving the physicians, both employed and independent, a real voice in the organization and getting their expertise leveraged going forward. That’s going to be the biggest predictor. Beyond that, a willingness to experiment.

We’re in a situation now where organizations can’t really afford to sit on the sidelines for too long with all the different models that CMS and private payors are putting up in order to encourage shared risk between providers and hospitals. A willingness to experiment would be another key to success in my mind because it’s really the only way to learn how to be successful in this new environment, how to get involved in it and not hang on to the current FFS environment until it withers and dies.

Excerpted from Essential Guide to Physician-Hospital Organizations: 7 Key Elements for PHO Success.

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