Hospitals versus physicians, POs versus PHOs: the providers' struggle for control of managed care contracting

The great majority of U.S. hospitals are at one stage or another of physician-hospital organization (PHO) formation, in an attempt to accomplish hospital-physician integration. Since early 1994, however, significant numbers of physicians have begun to form their own organizations and confederations. The physician organization (PO), a more highly evolved form of the independent practice association, usually covers a wide geographic area, and it can cross hospital boundaries. Founders of the PO nearly always wish to position the organization to negotiate "master contracts" directly with payers and employers, rendering hospitals mere subcontractors. This article examines the evolution of physician attitudes about PHOs and POs, and also gives insight into the details of PO formation. The author outlines barriers to PO formation, and draws a picture of a momentous industrywide struggle for control between physicians and hospitals.