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There are various departments or rather sectors that have been developed in the society to deal with challenges that emerge on a daily basis. Among these sectors is the healthcare sector that is mandated with the task of ensuring that societal health is maintained. The efficiency of the healthcare sector in any society across the globe is enhanced through the relationship that this sector has with physicians. In line with this, there are various physician-hospital arrangements that have been put in place in order to guarantee that a mutual and cohesive relationship between the physicians and the hospital does exist as a way of increasing the quality of services that are offered to patients.

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There are five commonly know types of arrangements between physicians and hospitals in the United States. Among them are the ‘Closed’ Physician-Hospital Organizations, CPHOs, and the Management Service Organization, MSO, (Cuellara & Gertlerb, 2006, p.11). The ‘Closed’ Physician Hospital Organizations can be described as joint ventures between physicians and hospitals that are made to give out administrative services to physicians, manage ambulatory care facilities within the environment in which physicians work, and assist in managed care contracting (Cuellara & Gertlerb, 2006, p.10). However, it is important to note that manage care contracting, in this case, is based on the quality of services that can be provided by these physicians and also considers the costs involved (p.11).

Management Service Organization on the other hand works on providing management and administrative services that are necessary for physicians. This, therefore, relieves the physicians from the responsibility of having to seek for management services. As a result they are able to concentrate on their work as physicians and thus work on improving their quality of services. The Management Service Organizations obtain their services as a group rather than as individuals, thus being in a position to obtain economies of scale which is passed on to physicians. This enables them to negotiate with healthcare purchasers and health plans. According to Cuellara & Gertlerb (2006), the Management Service Organizations acts as agents to physicians and the hospitals in contracting with managed care plans (p.11).

There are various issues that can be noted with both of these systems. To begin with, the integrated delivery systems between hospitals and physicians provide leeway to an effective care delivery for aggressive quality assurance, care management that guarantees cost-effective delivery and utilization review (Goldstein, 1995, p.79). In this way, the hospital and the physicians would be able to work together in such a way that maximum profits are reaped while at the same time avoiding compromise with the required medical service delivery standards.

Similarly, ‘Closed’ Physician Hospital Organizations and Management Service Organization as integrated systems provide advantages to not-for profit systems in terms of tax whereby these systems are provided with an opportunity to financing that is accompanied with low interest (Goldstein, 1995, p.79). This results from the fact that the integration delivery system works with groups rather than individuals thus being in a position to enjoy economies of scale. These are then passed on to physicians who are then able to improve the quality of their services as a result of this.

On the contrary, there are some differences that are exhibited between the two approaches to hospital-physician arrangements. ‘Closed’ Physician Hospital Organizations have been found to increase the standardization of services that are offered by physicians in hospitals since they focus on the quality of the services that are provided by these physicians. On the contrary, whereas Management Service Organization also focuses on the quality of services offered by physicians, they are unique in the sense they are able to buy assets of the participating physicians and also provide services that are aligned toward administrative areas. In other words, the assets of physicians’ practice are owned by Management Service Organization. Similarly, it is important for one to understand that the risks that are involved in the Management Service Organization are shared between the owners of the Management Service Organization and the physicians (Burns, 1995).

The Management Service Organization, MSO, can be termed as a more effective arrangement as compared to ‘Closed’ Physician Hospital Organizations. There are various reasons that have been found to elevate Management Service Organization to be better placed than CPHOs. To begin with, the ability to own the assets required by physicians in order for them to deliver quality service to their patients has been found to lessen pressure on the physicians thus enabling them to concentrate on enhancing the quality of their services. This ownership in some cases is accompanied by tax exemptions if this organization participates in charitable activities (Burns, 1995). Such benefits have been found to appraise the status of physicians and enhance a physician-hospital relationships.

In line with this, the integration of physicians and hospitals is one of the most challenging issues that need to be tackled in the medical world. Following this point, there are different arrangements that need to be put in place to improve the relationship between hospitals and physicians. In this regard, the ‘Closed’ Physician Hospital Organizations and Management Service Organization are some of the arrangements that have been made in the past to deal with these situations. However, Management Service Organization is better placed than ‘Closed’ Physician Hospital Organizations in providing arrangement opportunities between the hospitals and the physicians. This is due to the advantages that are given out by this system of arrangement.

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