• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
HSG Advisors

HSG Advisors

Building High-Performing Physician Networks

MENUMENU
  • Home
  • About HSG
    • About HSG
      • Shared Vision
      • Leadership Team
    • Careers
  • Healthcare Consulting
    • Physician Strategy
      • Health System Strategic Plans
      • Employed Physician Network Strategy
      • Physician Growth Strategy
      • Shared Vision and Culture Development
      • Physician Manpower Plans
      • Service Line Strategy
      • Physician Co-Management
    • Physician Leadership
      • Shared Vision and Culture Development
      • Physician Burnout
      • Physician Governance and Leadership
    • Performance Improvement
      • Network Performance Improvement
      • Performance Improvement Implementation
      • Network Revenue Cycle
      • Practice Care Model Transformation
      • Practice Acquisitions
      • Advanced Practice Provider (APP) Utilization
      • Virtual Health
    • Network Integrity
      • Patient Share of Care
      • Patient Flow
      • Provider Service Location Analysis
      • Market Insight
      • Physician Network Intelligence
    • Physician Compensation
      • Compensation Plan Design
      • Fair Market Value and Commercial Reasonableness Opinions
      • Advanced Practice Provider (APP) Compensation
      • Medicare Physician Fee Schedule
  • Thought Leadership
  • Contact Us
  • Medicare Changes
  • Client Log-In
Client Log-In LinkedIn LinkedIn

Contact Us

Case Study: Developing a Clinically-Integrated PHO to Align an Employed Physician Network and Independent Community Physicians

Background A large multi-specialty physician group (wholly owned and operated by a four-hospital health system) took a 25-percent upside/downside risk as a percent of premium on 6,000 Medicare Advantage (MA) patients. After realizing losses of over $1 million the first year, they determined tighter alignment with key independent specialist groups was necessary to better manage […]

April 28, 2015 by HSG

Background

A large multi-specialty physician group (wholly owned and operated by a four-hospital health system) took a 25-percent upside/downside risk as a percent of premium on 6,000 Medicare Advantage (MA) patients. After realizing losses of over $1 million the first year, they determined tighter alignment with key independent specialist groups was necessary to better manage the total cost of care. Further exacerbating the need for a strategy to align the economic incentives of employed and independent physicians was the fact that they were in year one of a three-year contract. The contract called for increased levels of risk and lives at risk, with 100 percent upside/downside risk sharing on over 11,000 lives at the start of year three. At the same time, two other commercial payers covering additional MA patients had expressed an interest in entering into similar downside risk arrangements.

 

A profile of the employed physician group:

  • Over 350 providers: approximately 170 PCPs, 180 specialists and 50 advanced practice providers
  • Specialty services available within the group included cardiology, gastroenterology, general surgery, nephrology, pulmonology, women’s health and others
  • Key specialties essential for managing population health that were not part of the employed group included oncology, orthopedics and urology
  • Nearly 100 practice locations in a suburban setting outside a major city in the Midwest
  • The group’s management had spent the past four years aggressively expanding specialty services and developing capabilities in population health management

 

Solution

After a lengthy evaluation process, it was decided to create a clinically integrated PHO (Physician Hospital Organization) capable of accepting and managing an array of value-based contracts. The PHO was predicated on the following fundamental principles:

  • Leverage the resources and existing infrastructure of the hospital (e.g. IT, contracting, budgeting/ financial management and access to capital) and the employed physician group (e.g. informatics, quality tracking and reporting, care management, physician leadership; and its Patient Centered Medical Home (PCMH) Level 3 designation of 28 primary care practices);
  • Create a consensus-driven organization that put employed and independent physicians and the hospitals on an equal playing field;
  • All participating physicians would share in the financial gains and/ or losses incurred from risk contracts; and
  • All participating physicians would be required to participate in all contracts negotiated by the PHO.

 

Result

The health system created a PHO that was well on its way to becoming clinically and financially integrated. It was set up as a separate legal entity, with a unique governance structure that required unanimous approval across the three stakeholder groups (hospital, employed physicians and independent physicians).

 

Actual improvements in the total cost of care have yet to be determined, however, early projections indicate an estimated two to three percent savings (this particular population was considered “loosely managed”) in total spend for the targeted population over the previous year.

 

Targeted independent physician groups were highly supportive of this model, resulting in 100 percent participation of the large groups (more than five providers) in the PHO within six months. This was due to the deliberate effort to solicit their input from the beginning, provide them with an opportunity to get in at the ground level, and shape the core components of the clinical integration program.

 

 

 

 

Category iconCase Studies,  Physician Strategy Tag iconClinically Integrated PHO,  integated PHO model,  Medicare Advantage,  PHO,  pho development,  physician hospital organization,  reviving phos

Primary Sidebar

David W. Miller

(502) 814-1188 dmiller@hsgadvisors.com

Terrence R. McWilliams, MD, FAAFP

(502) 614-4292 tmcwilliams@hsgadvisors.com

Receive Physician Strategy News

  • This field is for validation purposes and should be left unchanged.

Recent Thought Leadership

  • Key Primary Care Considerations to Drive Access and Patient Capture (SHSMD Educational Session)
  • Leveraging Outpatient Utilization Data to Develop Ambulatory Growth Strategies
  • HSG Claims Data Analytics Updates: February 2023
  • 2023 Medicare Physician Fee Schedule Updates
  • HSG Advisors Expands Consulting Services and Data Analytics Capabilities in Response to National Outpatient Utilization Trend

Insights for Confident Leaders

Sign Up for HSG's Physician Strategy News™ and Notifications on New Thought Leadership
  • This field is for validation purposes and should be left unchanged.

Footer

9850 Von Allmen Court
Suite 201
Louisville, Kentucky 40241

(502) 814-1180

info@HSGadvisors.com

  • Physician Strategy
  • Physician Leadership
  • Performance Improvement
  • Network Integrity
  • Physician Compensation
  • About HSG
  • Purchase HSG’s Book
  • Leadership Team
  • Careers at HSG
  • Thought Leadership
  • Privacy Policy

Take HSG’s Physician Network Evaluation Survey
Get Started Here

  • LinkedIn
  • Vimeo

© 2023 HSG Advisors. Website managed by SiteCare.com