Provider integration: PO (physician organization) versus PHO (physician hospital organization)

The PO model, in which a PO and hospitals "peacefully coexist" without some level of integration, may not be sustainable in the long term, as managed care and healthcare reform initiatives pressure providers to integrate delivery and align their economic incentives (either on a fee-for-service or capitated basis). Therefore, while integrating physicians and hospitals within a PHO may not be attractive to physicians initially, opting for an approach that does not integrate physician and hospital services and align their economic incentives can eventually invite a significant level of competition between the two.