As a new player in the healthcare market, physician-hospital organizations are putting competitive pressure on prices.
Executives at the Bay Area Business Group on Health in San Francisco, a coalition of large employers, said the growth of PHOs helped the group negotiate lower premiums with 17 HMOs last month.
"Down the road, if (PHOs) have high-quality providers and perform the same functions as an HMO and do it more cheaply, I think employers will definitely look at them" for the possibility of direct contracting, said Patricia Powers, BBGH's executive director.
"The proliferation of PHOs has definitely had downward pressure on pricing," said Steven T. Plochocki, chief operating officer of Costa Mesa, Calif.-based Abbey Home Healthcare. "You'll always find an organization that will do business at a loss. Everybody tests the limits. If everyone comes in at five bucks and one guy comes in at four, that's the new threshold."