Since the 1997 Balanced Budget Act created the possibility for Medicare provider-sponsored organizations, the healthcare industry has been busy analyzing their pros and cons with a hopeful yet leery gaze.
At the HFMA annual conference, Colleen Dowd, vice president of Nashville-based managed-care services organization Baptist Saint Thomas Health Associates, and Allan Fine, senior manager at consulting firm Ernst & Young in Chicago, will continue the debate on PSOs and provide insights into their risks and benefits.
Their presentation, to be held Wednesday, July 1, at 1 p.m., is titled "Provider Sponsored Organizations: Opportunity or Nightmare."
The session will highlight information from Dowd and Fine's book Provider Sponsored Organizations: Emerging Opportunities for Growth, which will be available in July. The book, printed by Gaithersburg, Md.-based Aspen Publishers, is a compilation of industry insiders' analyses of PSOs with other information contributed by Bruce Fried, former head of HCFA's managed-care office. Dowd and Fine will help providers decide whether they want to be involved in PSOs. They will cover such topics as operating and regulating PSOs. Most important, they will assess the risks of PSOs.
"Most people want to talk about financial risk," Dowd says. "We want to concentrate on the strategic risk. Within that there's a financial component."
Because PSOs allow providers to enter risk contracts with Medicare for care to beneficiaries, the ultimate risk providers face when creating PSOs is tainting their reputation in the communities in which they live and serve, Dowd says.
"It's easier to blame a national HMO than for providers to take the initiative to start a health plan and not be successful," she says. "You're in your community. It's your name and your patients. There's no blaming (someone else) at that point. When a provider and health plan come together in a community, it's tough to do both. Not many people can be successful doing both."
Despite her warnings, Dowd contends PSOs might offer providers "a good opportunity if you go in with the right expectations and the right market," she says.
"The opportunities are to exceed market expectations of traditional HMOs. That's not going to be easy," she adds.
Ultimately, providers must be wary of their motives.
"Creating a PSO is not a way to get out of managed care," Dowd says. "Someone needs to think from the perspective of being better than a traditional HMO. If people are uncomfortable with operational elements and patient issues related to managed care, a PSO doesn't escape that."