Chapter 6
The Basic PHO (Joint
Governance) or IPA
e physician-hospital organization (PHO) is revisited here because it is a ubiqui-
tous organization that is installed in many health care enterprises. Given the nature
of bureaucracies, it is something that may not go away, even if it is dysfunctional
or unable to achieve the goals that are necessary in a new marketplace of con-
sumer choice and competitive insurance exchanges. Can the PHO transform itself
into a functioning accountable care organization (ACO)? Probably not, unless it is
structured in a fashion that will be able to effectively plan and react. is takes an
organization that is focused on the needs of the marketplace and not the needs of
its constituencies.
e PHO (and the corollary organization—the independent provider associa-
tion (IPA)) is addressed here because it is probably something that is already in
existence and which has an existing membership, infrastructure, and governance
process. It may also have restrictions on its membership that restrain them from
making determinations about moving their loyalties or membership to another
organization. e idea and the basic premise of the IPA/PHO is not an impediment
unless the organization itself is. Can the organization transform itself to address
new challenges and new opportunities? e traditional medical staff cannot, by its
very nature of being all-inclusive, become the contracting engine that will address
newly emerging market demands from organized purchasers. Each IPA and PHO
42Medical Staff Integration
is a separate and distinct entity, and there may be some that can actually rise to the
challenges of the modern contracting environment.
One way to find out is to simply ask the following questions. A series of no
answers will indicate that the PHO/IPA is not a vehicle for change and transforma-
tion, but an impediment.
Do we have sufficient primary care practices with capacity capable of acquiring
new patients in the near-term future that are dedicated to the organization
and its members?
Can we contract on behalf of our membership using a “single signature” to bind
all members?
Do we have sufficient management and core infrastructure to be able to commu-
nicate effectively internally and to implement programming across all com-
ponents of our membership?
Do we have a governance process that can deal with membership challenges?
at is, can we add doctors on a need basis and can we exclude doctors from
contracting if they do not meet standards to which we have agreed?
ese are pretty basic questions, but they should be at the core of the process to
define the effectiveness and capabilities of an organization that can exist and thrive
in the emerging marketplace. e corollary to the questions might be, “If we are
not there yet, can we get there?” If not, it may be time for a new organization.
New organizations are sometimes spawned from traditional structures, but not
if they have to carry the impediments and traditions that kept the previous orga-
nizations from being successful. If there is going to be reorganization under some
new structure, it is necessary to figure out what to do with the old structure. In
another section of the book, we address a relatively new form of hospital and physi-
cian collaboration—the contracted physician groups. We recognize that the tradi-
tional voluntary medical staff is a structure that will probably be left in place. ey
are in a form that has, over the years, been relegated to almost an honorary status
in most hospitals, and while they do not generally have a structure that impedes
contracting, they do not provide a basis of any kind for it.
With the medical sta
and the contracted practices as links to the hospital, where does the PHO overlap,
contribute, or compete?
As represented in Figure 6.1, the PHO takes over for the medical component
and becomes the contracting arm for the providers. However, if the providers also
One area in which the traditional medical staff may impede contracting is where a particular
department can block or engage in behavior that limits access to medical staff credentials or
departmental privileges. If the hospital finds itself in the position of having to go to the medi-
cal staff (or to a department within it) to get permission to add a doctor to the schedule in a GI
lab or a cardiology procedural unit, then the medical staff is acting in a fashion that is in need
of challenge. e medical staff should always address quality and performance matters but
should never be in a position to restrict access to resources from otherwise qualified providers.

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