Physician Hospital Partnership (PHP): A Strategic Model for Collaborative Healthcare Delivery

In the United States, as the volume of outpatients continues to grow, healthcare professionals have embarked on new explorations, seeking innovative collaborative models between physicians and hospitals. For instance, surgical specialists or physician groups are partnering with hospitals to jointly establish Ambulatory Surgery Centers (ASCs) through joint-stock enterprise structures. This model is currently popular and is poised to occupy a significant place in future physician-hospital collaboration frameworks. It represents one form of Physician-Hospital Partnership (PHP). PHP is widespread in the U.S., where the relationship between physicians and hospitals is not one of employment but rather of partnership. Internationally, top-tier physicians never become hospital employees; instead, they practice as independent professionals. Currently, China lacks an evaluation system to identify elite physicians, relying more on institutional mechanisms for retention, which does not reflect the true market value of these doctors.What Is a PHP (Physician-Hospital Partnership)?Literally, it refers to a partnership established between physicians and hospitals. The specific collaboration models are diverse and are flexibly determined through negotiations between the hospital and the physicians.Why Was PHP Created?In short, collaboration fosters high-efficiency, high-quality medical services while reducing healthcare costs. From the physicians’ perspective: hospitals can provide a stable source of income. Additionally, physicians seek to maintain a work-life balance and desire greater flexibility in managing their time. They also hope to gain more control over resources such as operating rooms, equipment, nurses, and other staff, which can be shared upon joining the hospital. From the hospital’s perspective: this approach avoids competition with physicians, enhances physician loyalty, and retains this critical resource. Furthermore, it sends a positive message to the external community that the hospital respects and values physicians, demonstrating a strong commitment to addressing their needs. This proactive stance helps attract more physicians to the hospital.What are the main PHP models?Taking a cancer treatment center as an example, the collaboration model is as follows:These arrangements can be broadly categorized into the following five types:1. Harmonious Development: Physicians and hospitals jointly draft documents to establish rules for future service workflows, specifying the respective responsibilities and obligations of both parties.2. Co-Management: Independent physicians contract with hospitals to participate in and jointly manage medical services. The physician team acts as a general contractor, performing high-level surgeries and receiving commensurate compensation based on treatment outcomes, thereby granting physicians bargaining power. Additionally, physicians can manage clinical care projects for both outpatient and inpatient populations.3. On-Demand Leasing: Independent physicians lease necessary specialized services or facilities from hospitals. For instance, physicians may seek auxiliary services such as medical reimbursement support or electronic health record (EHR) management. Conversely, hospitals can lease technical services from physicians, paying market rates based on the value of labor provided.4. Joint Ventures: This is currently a mainstream collaboration model. Physician teams and hospitals co-invest to establish Ambulatory Surgery Centers (ASCs), holding equity shares respectively, sharing clinical facilities and other resources, and jointly bearing risks and returns, with clear stipulations regarding equity ownership and control rights. The advantages of this model include physicians leveraging hospital backing to gain negotiating leverage with payers and suppliers, participating in health insurance reforms, and accessing amenities and EHR systems. Hospitals expand their market share through collaboration with surgical physicians, fostering a healthcare environment characterized by high quality and low cost. The specific revenue-sharing ratio varies by case, though hospitals typically hold the majority stake.Another form of equity structure involves establishing an independent holding company (“HoldCo”) in advance, where the hospital, physicians, and the ASC management entity share both tangible and intangible resources, including the hospital’s influence and the management company’s expert experience. Typically, the hospital holds 51% of the shares and the management company 49%, or they split equity 50/50. In this arrangement, the “HoldCo” owns the majority interest in the ASC, with the remaining portion belonging to the physicians. Furthermore, the management company can invest directly in the ASC, as well as in the hospital and physicians.5. Employment Model: This model is also widespread, wherein hospitals fully employ physicians, compensating them with salaries and bonuses based on medical output or managerial responsibilities. Younger physicians often prefer stable patient volumes over sporadic consultations, and hospitals can offer attractive conditions to meet this need. While some hospitals or healthcare systems allow physicians to collaborate with ASCs for additional income, most hospitals prohibit physicians from engaging in part-time clinical practice elsewhere.Under different Physician-Hospital Partnership (PHP) models, the degree of integration between hospitals and physicians, from low to high, is as follows: Harmonious Development, Co-Management, Customized Leasing Agreements, Equity-Based Joint Ventures, and Employment Relationships.Under Different Collaboration Models, the Relationship Between Doctors and Hospitals Also Varies: What are the benefits of the PHP model?1. Collaboration transforms the relationship between physicians and hospitals from a fragile, tenuous connection into a robust, equal partnership. Both parties are obligated to comply with all agreed-upon terms. Through negotiation, concerns and biases on both sides are addressed and resolved, ultimately deepening mutual understanding. This improvement in their relationship positively contributes to enhancing the quality of medical services.2. Collaboration enables both physicians and hospitals to achieve their respective goals and meet their needs. Physicians enjoy greater schedule flexibility, allowing them to better balance family life, and have a stronger voice in major hospital decisions, such as leadership elections. By improving relationships with physicians, hospitals can also secure greater physician loyalty and retention.3. Collaboration improves medical efficiency and reduces costs. Although both parties aim to establish collaboration, obstacles must be overcome: First, the collaborative relationship must comply with healthcare policies and regulations. Second, there may be discrepancies between the two parties in assessing the value of physicians’ contributions.What Are the Difficulties in Implementing PHP?Given the differing perspectives and respective standpoints of physicians and hospital administrators, numerous obstacles are inevitable in their collaboration.

Cultural differences are manifested in the following tendencies:Physicians tend to be: Doers, passive, independent individuals, sole decision-makers, and owners. Physicians either possess these traits or have developed them through long-term training. Patients require physicians who can rapidly manage their conditions and make decisions.Hospital administrators tend to be: Planners, proactive, participants, collaborative problem-solvers, and business managers. They excel at handling macro-level issues, catering to a larger population of patients, employees, and their families.

It is evident that collaboration is fraught with negotiation and compromise, requiring extensive communication and mutual understanding. Both parties harbor biases or lack sufficient trust in each other; physicians fear hospital bureaucracy and inefficiency, resulting in agreements that remain superficial and are not genuinely implemented. Hospitals, concerned about excessive physician control, are reluctant to delegate authority as physicians desire. If these issues are not adequately resolved, both sides will remain engaged in a prolonged state of strategic gaming, characterized by overt and covert struggles, with continuous conflicts and friction.How to Improve the PHP Model to Achieve a Win-Win Situation?1. Understand each other’s goals and motivations 2. Develop clear plans and design a blueprint 3. Align objectives and reach consensus 4. Engage in open communication regarding goals 5. Introduce equity partners 6. Creatively redefine roles and establish novel partnerships 7. Maintain honesty and transparency between both parties 8. Uphold strict standards and remain committed to principles 9. Make decisions based on facts, avoiding rash judgments 10. Timely disseminate and communicate project outcomes 11. Physicians should consider issues from the hospital’s perspective and understand the institution’s circumstances 12. Clearly define division of labor and establish a robust incentive mechanism 13. Specify dispute resolution methods in the cooperation agreement Domestic Example: Dr. Zhang Qiang, a star physician who founded a physician group, has his own understanding of introducing the overseas Physician-Hospital Partnership (PHP) model. He believes that the core of PHP lies in physicians taking the lead rather than serving as hospital employees. The physician team signs contracts with the hospital, while the physician group signs agreements with the physician teams and acts as the parent entity for these teams. Physicians generate income through medical services, and, in accordance with international practice, insurers serve as the payers. For further details, please refer to an article by VCBeat.《Why Are Physician Groups So Popular? Q&A with Dr. Zhang Qiang》 Chief Advisor for VCBeat’s Glossary of Hot Terms in Internet Healthcare: Zhao Xinyuan, current CEO of Beijing Yingtai Kelong Technology Co., Ltd., and member of the Technical Steering Committee of HL7 China. VCBeat is currently recruiting volunteers to analyze trending English terms in digital health. We welcome you to share your insights. Please follow the VCBeat WeChat Official Account: VCBEAT, and contact us!