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stays,8 fewer-than-average Caesarian sections, etc. The UHMG
physicians were therefore courted by several HMO and hospital
organizations in the area as acquisition targets.
In petitioners' view, the IPA model, which they had adopted
in forming UHMG, did not prove to be an especially effective
means of preserving the economic viability of their medical
practice in a managed care environment, where the risk of having
sicker-than-average patients was shifted from insurers to health
care providers. That was so because, while the IPA arrangement
provided a mechanism whereby petitioners could treat patients
with HMO coverage, the IPA arrangement did not create a capital
pool, or result in sufficient size, to allow for the management,
or effective spreading, of the foregoing new risk. Instead,
petitioners believed, effective management of the risk would
require that they affiliate with a larger organization. They
also believed that such an affiliation would bring them greater
leverage in negotiating capitation rates with HMOs and other
insurers. A final impetus towards affiliation was the
anticipation, by petitioners and other members of the medical
community, that managed care would spread and consolidation of
healthcare providers would increase as a result of a major effort
8 UHMG physicians had pioneered the use of a "hospitalist",
i.e., the full-time assignment of a physician from their group to
a hospital to oversee the care of hospitalized patients of other
UHMG physicians, rather than having each physician individually
care for his or her hospitalized patients.
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Last modified: March 27, 2008