What is a physician hospital organization (PHO)?

As the healthcare industry evolves, physicians and hospitals seek new models to enhance collaboration. One such model is a physician hospital organization (PHO). A PHO serves as a strategic alliance. It helps streamline operations, improve quality of care, and deliver better health outcomes for patients. Given the need for efficient and effective healthcare, it's important to understand how these organizations work.

In this article, we'll explore the function, purpose, and benefits of PHOs.

In this blog post, you'll learn the following:

• The difference between a PHO and a physician-led hospital.
• Why a PHO is beneficial for healthcare professionals.
• How a PHO offers advantages to patients when it comes to their medical care.

Definition of a PHO

A PHO is a formal alliance between hospitals and physicians. It aims to improve the coordination of healthcare services and enhance patients’ quality of care. PHOs function as a collaborative network that combines the resources and clinical expertise of healthcare providers. This allows them to deliver integrated and efficient medical care.

It's important to note that a PHO and a physician-led hospital aren't the same thing. Physicians own physician-led hospitals, which have a strong focus on the patient-physician relationship.

There are more than 200 physician-led hospitals¹ across the nation. They come in a variety of forms:

• Children's hospitals
• General acute care hospitals
• Hospitals that specialize in certain areas

How does a PHO function?

PHOs negotiate contracts with payers (insurance companies) to provide a comprehensive package of services. These services can include bundled payments or global budgets. This care contracting arrangement incentivizes providers to focus on quality and cost-effective care.

PHOs also facilitate the coordination of care across different settings and providers. This ensures that patients receive seamless transitions between primary medical care, specialty care, and hospital services. This involves sharing patient information and enhancing communication among providers.

What advantages does a PHO provide for doctors and their practices?

A PHO acts as a bridge in the healthcare industry. It brings together a network of healthcare providers to better manage patient care. It also allows healthare providers to negotiate better agreements with managed care. With its large network of physicians and hospitals, a PHO is a valuable partner for health plans on patient care initiatives.

Working with a PHO offers advantages for doctors when it comes to patient care and business. As part of an integrated provider group, they can better controll costs, improve quality, and enhance patient satisfaction. They can also recieve performance incentives for providing better care at lower costs. This is known as pay-for-performance, value-based reimbursement, value-based model, or value-based care².

PHOs³ may also offer growing practice management support, including administrative and technology solutions that small practices may lack.

These solutions can include:

• Electronic medical record systems
• Guidance
• Educational programs
• Networking opportunities
• Clinical integrations, such as creating a provider network for accountable care organizations (ACOs)

What advantages does a PHO provide for patients?

PHOs address several concerns for patients⁴, like rising healthcare costs, poor care quality, and overall access to care.

PHOs also offer several benefits to patients, such as:

• Improved care management. PHOs promote collaboration among healthcare providers, ensuring patients receive comprehensive and coordinated care. This collaboration reduces gaps in treatment and enhances patient satisfaction. Better coordinated care can also reduce the likelihood of medical errors.
• Patient-centered care. PHOs focus on the needs of patients. This ensures that they tailor care to individual preferences and health conditions. This approach fosters stronger patient-provider relationships and better adherence to treatment plans.
• Affordable healthcare. PHOs contract with insurance carriers, providing services at agreed-upon rates. This can result in lower costs for covered individuals. PHOs also reduce healthcare costs by minimizing unnecessary tests and hospitalizations and promoting preventive care.

• Access to a broader range of services. By integrating various healthcare providers, PHOs can offer patients a bundle of healthcare services. This includes access to specialty care and rehabilitation, all within a coordinated framework.

Conclusion

A PHO is a collaborative legal entity designed to enhance healthcare delivery through joint efforts among hospitals and physicians. It aims for improved quality, increased efficiency, and reduced overall healthcare costs. Whether you're a patient, healthcare professional, or administrator, understanding PHOs can offer valuable insights into how medical care is evolving.

This blog article was originally published on January 20, 2013. It was last updated on September 11, 2024.

1. https://physiciansled.com/
2. https://wtcs.pressbooks.pub/nursingmpc/chapter/8-4-healthcare-reimbursement-models/
3. https://www.nuvancehealth.org/about-us/who-we-are/physician-hospital-organization/physician-hospital-organization-faqs
4. https://www.medvision-solutions.com/blog/what-is-a-pho-in-healthcare