HMO’s are trying to make a comeback. I guess those marketing these schemes to get rich denying care think that people’s memories are short. They may be right. Another nightmare making a comeback is the Physician Hospital Organization (PHO). These little gems are sometimes called something else, but essentially, hospitals lure physicians into thinking that if the two (doctors and hospitals) act together in contracting with the government or insurance companies, they will both be better off for having not acted alone. Several hospitals tried this in Oklahoma City back in the early 90′s, trying to capitalize on the physician’s fears of the Clinton Health Care Plan. When the dust settled these attempts to make the physicians SUCKERS! failed. In spite of the attempts by the AMA to make it a reality, the Clinton plan failed before any of these unholy alliances were finalized. It was clear afterwards that the physicians were seen as chumps by the hospitals and had these efforts been successful, the doctors would have found themselves trapped by a contractual arrangement that would have destroyed their independence and made the hospitals loads more cash. The doctors that nearly fell for this were angry. The brownshirt physician collaborators were vilified. And now….they are back. This collaboration between the hospitals and the physicians has taken two forms.
One hospital (let’s call them hospital #1) in Oklahoma City is aggressively hiring doctors. This will not end well for this hospital, as human nature being what it is, the hired doctors will not work as hard with a salary guarantee and relieved of much of their overhead. This will not end well for the doctors, as upon contract renewal, they will be offered half of their previous salary and find themselves saddled with a malpractice policy “tail” that is so expensive they can not realistically separate from the hospital. In addition, that part of their practice that was independent of the hospital will be gone, their entire patient volume originating from the “hospital network” referral doctors. They would also labor under non-compete clauses that would prevent them from practicing within a certain mile radius of the hospital and would probably be precluded from seeing any of the patients currently in their practice. Ok…I could go on but this is exhausting and I’m pretty sure you’ve got it by now.
Another hospital (how about hospital #2) in Oklahoma City is enjoying the influx of physicians that hospital #1 has run off. Some physicians, fed up with the aggressive physician practice takeovers by hospital #1 have simply left. Hospital #2, another large hospital, has taken a different approach. This, too, will not end well. This hospital has a few physician employees but has decided to revive the old PHO concept. Physicians are told that the hospital doesn’t want to hire them. They just want to work with them. You know…work together. ”Just agree to a few provisions in this contract and together we will all prosper like never before.” My advice to you if you are a physician and have been approached with a PHO offer is thus: look for your exit strategy…what my favorite lawyer calls your “punch out clause.” Start the conversation with the hospital administrator with a discussion of “…what if this doesn’t work out between us.” They won’t like that. You aren’t supposed to ask that. ”But it will work out,” they will say. Or ask,”..I think I hear what you are offering me but what is in this for you?” These are the types of questions that any businessman would ask but that physicians tend not to ask. You will be tethered and bound in some way. Your independence will be diminished. They will own some part of you, not unlike if you had succumbed to the offer of employment.
Hospitals #1 and #2 are both in the business of controlling physicians and their practices, they have just gone about it differently. The only ones who suffer more from these arrangements than the physicians are the patients with whom they formerly had an uncontaminated relationship.
G. Keith Smith, M.D.
