PHOs place second to large MD groups
PHOs growing by leaps and bounds
In terms of numbers, PHOs are definitely in a boom mode.
As of January, 90% of hospitals pooled either owned or sponsored a PHO in 1996 a jump from 1995, when 71% reported owning or sponsoring a PHO.
The study, 1996 Profile of Physician-Hospital Organizations and PHO Executives, was conducted by the American Association of Integrated Healthcare Delivery Systems (AAIHDS) of Glen Allen, VA, and Tyler & Co. in Atlanta.
If you’re hearing that PHOs are on the brink of demise, "You’re hearing wrong," asserts Randy Killian, executive director of the AAIHDS. "PHOs are the only entity I know of where hospitals and physicians can come together for the right reasons to create a more efficient delivery system, reduce costs, and improve patient satisfaction," Killian says.
That’s not to say PHOs or any other integrated delivery system own the HMO market. More recently, InterStudy, the Minneapolis-based managed care research group, reports that organized delivery systems serve 18% of total HMO enrollment. Of that 18%, multispecialty groups have 34% of HMO contracts, PHOs have 26%, management service organizations have 13%, with the remainder held by groups such as foundations, fully integrated health organizations, and other types of systems.
Neck-to-neck competitors
InterStudy’s report, HMO Industry Report 7.1, shows that PHOs and multispecialty groups are neck-to-neck competitors. (See chart, p. 113.) Of HMOs sampled, 76.7% contract with large doctor groups, while 56.6% contract with PHOs.
While InterStudy does not have a view of this competitive trend over time, its authors suggest that PHOs are on the rise. "Not surprisingly, large multispecialty group practices are the most common type of organized delivery systems under contract with HMOs," writes lead author, Richard Hamer.
"More surprising is the emergence of PHOs as organizations rivaling multispecialty groups in their share of the organized delivery system HMO market," Hamer says.
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