Physician-Hospital Organization Case Study

CONTRACTUAL ARRANGEMENTS:
This alignment option involves a series of contracts or agreements between the physician and physician group with the hospital or health systems which involves wide range of agreements like on-call arrangements, physician recruitment, medical directorship and stipends, clinical co-management services, customer service programs, professional service arrangements, legal partnerships and joint ventures with predetermined payment methods. When compared with physician employment, this alignment model exhibits low degree of integration and the agreement between the both parties stipulates the list of functioning services and method of compensations and incentive payments using pre-determined incentive metrics and quality

Through this organization hospitals and small group practices can be provided with better reimbursements, efficient claim management and better delivery of care by negotiating with the payors and obtaining better health plan contracts. PHOs serve a messenger role between the providers and payors by submitting the fee schedules to the network physicians and enabling efforts to have contracting terms between the providers and payors. Traditionally, the contracts were between the hospitals and payors or small group practices and payors with PHOs as a third party or messenger, but with the emerging trend of clinical integration between the physicians and hospitals PHO enables both the parties involved in the contact agreement which provides better bargaining leverage in negotiation as the collaboration will lead to controlling hospital costs and improving the quality. With the current Medicare and Medicaid payment models involving bundled payments, global payments and episode based payments along with clinical integration between the physicians and hospitals, this Physician – hospital organization arrangement reduces the adversarial or confrontational risk involved by making contracts less complex and reducing the costs by greater cohesion and cooperation between the both parties compared to traditional PHO independent contractual agreements with the insurance companies and payors. Most important concern with the PHO service model is the potential of antitrust liability in the establishing fee schedule and contracting as price fixing arrangements in between the competitors is considered offensive and with the clinical integration between the physicians and hospitals can resolve such issue. Under these arrangements, ownership and governance of the PHO is given emphasis enabling that both the