Healthcare Performance Benchmarks
Healthcare Performance Benchmarks
April 17, 2013Vol. III Issue 16

The Legal Structure of a
Physician-Hospital Organization

The Legal Structure of a Physician-Hospital Organization This Week's Challenge: As payors and large employers aggressively look to providers to move from volume to value of healthcare services, the industry is seeing a resurgence in physician-hospital organizations (PHOs). With an eye toward shared savings agreements, PHOs provide a collaboration tool for physicians and hospitals to organize and participate in these evolving healthcare payment and delivery models. We wanted to share the legal structure of a PHO, according to Healthcare Strategy Group.

Click here to view a printable version of the table.

What We Learned: "The legal structure changed dramatically in 2006. Advocate Physician Partners were the first quality-based PHO, or independent practice association (IPA) program in the country, and ran afoul of the anti-trust rules. The Federal Trade Commission said that they were trying to negotiate fees that violated the rules. Finally, the agreement came down that cost control and quality assurance could not happen unless the physicians were in this type of organization. Now the organization itself allowed the attainment of the quality goals, so that it was in fact acceptable. Those have now been placed in certain Safe Harbor rules that say, ‘If you meet the following, we’re not going to worry about you as long as you do these things.’ Now you can either go and request an opinion later, but most of what we’re seeing is people crafting documents around these Safe Harbors and going out and doing the program assuming that everything is okay. The reason we’re here is we’re controlling utilization; we’re ensuring quality. The driver has to be quality."

— Greg Mertz, director of Healthcare Strategy Group; and Travis Ansel, manager of strategic services for Healthcare Strategy Group.

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

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

© 2013 Healthcare Performance Benchmarks by Healthcare Intelligence Network.
Editor: Jessica Fornarotto,;
Publisher: Melanie Matthews,

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