Penn State Health St. Joseph is part of the clinically integrated network, Penn State Health Care Partners.

Learn more about St. Joseph Provider Hospital Organization

What is St. Joseph Provider Hospital Organization (SJPHO)?

SJPHO is a new limited liability company (“LLC”) being formed by St. Joseph Regional Health Network to link St. Joseph Medical Center (“SJMC”) with physicians on its medical staff for the purpose of contracting with payers and self- insured employers to provide clinically integrated care and to assist SJMC in improving the quality and efficiency of hospital services. SJPHO is structured, therefore, as a clinically integrated network with SJMC and the physicians who join it as participants in the network.

How do I find out more about participation in the SJPHO?

If you are a medical provider (physician, NP, PA) in primary care or a specialty practice, or an institution providing health care services (home health, hospice, skilled nursing facility), contact the SJPHO and learn more about opportunities to join the initiative. Contact Mary Hahn, Vice President, Strategy, St. Joseph Provider Hospital Organization by phone at 610-378-2404 or

How is SJPHO governed?

The initial board of SJPHO will be composed of three hospital representatives and five participating physicians representatives. The Operating Agreement for SJPHO (similar to bylaws for a corporation) requires that four representatives must be selected by the participating physicians.

How do I join SJPHO?

Physicians join SJPHO through the physician group in which they practice; the physician group will sign a Participant Agreement that sets forth in detail the requirements that physicians must meet to be a member of SJPHO, and each physician in the group will sign an Addendum to the Participant Agreement to signify his/her agreement to abide by the requirements stated in the Participant Agreement.

What is “clinical integration”?

Clinical integration as defined by the Federal Trade Commission is “An active and ongoing program to evaluate and modify the clinical practice patterns of the physician participants so as to create a high degree of interdependence and collaboration among the physicians to control costs and ensure quality.”

What are the outcomes of effective clinical integration initiatives?

An effective clinical integration program contains initiatives that use proven clinical protocols and measures to improve patient care, decrease cost and demonstrate value to the market.

In “real life,” what does a clinically-integrated network of independent physicians look like?

In most instances, clinical integration involves a hospital and physicians on its medical staff who create management capabilities to:

  1. Identify, adopt and adhere to clinical protocols for the treatment of particular disease states
  2. Develop mechanisms to monitor compliance with the adopted protocols across the continuum of care
  3. Collaborate with the hospital or hospital system to encourage compliance with inpatient performance improvement processes and protocols
  4. Enter into contractual arrangements with payers in a way that financially recognizes the physicians’ efforts to improve health care quality and efficiency
  5. Use data
  6. Care coordination
  7. Wellness
  8. Patient engagement

Will clinical integration require me to place my fees at risk in some sort of withhold or capitation model?

No. While clinical integration utilizes many of the same quality improvement and medical management techniques that would allow for effective management of capitation, it does not require the use of withholds or capitation.

Does clinical integration mean that I will be able to negotiate with other doctors in the program for fee-for service rates?

Yes. In successful clinical integration programs, collectively‑negotiated contracts with payers can include an enhanced fee schedule that recognizes the value of the higher quality and greater efficiency furnished through the clinical integration program. Such arrangements may also involve financial rewards and incentives for physicians who perform well against the standards established by the program.

Does this mean that clinical integration will guarantee better contracts for doctors?

No. Clinical integration allows non-affiliated physicians to approach payers as a collective in a legal and appropriate manner. The success of a clinical integration program in obtaining better payer contracts will depend on the payer’s willingness to negotiate with the CIN for improved quality through financial incentives for physicians and the physicians’ ability to achieve improved quality and efficiency outlined in the CI Program. To the extent that a payor is not willing to negotiate with the CIN, the participants are free to negotiate individually with the payor.

Will physicians be involved in the development of clinical integration and the leadership of the program at our health system?

Yes. Identified physician leaders along with health system leadership will work to create a new independent physician network. This physician network will be governed by a board composed predominately of physicians, and will operate for the explicit purpose of developing and implementing a Clinical Integration Program. Physicians will lead and participate on subcommittees that develop key components of the program.

What benefit do hospitals provide in the development of clinical integration programs?

Partnering with a hospital or health system can provide distinct advantages to a network of independent physicians in the development of clinical integration. In instances where the hospital shares the same quality vision as the physicians, the hospital can be a powerful ally in program development by:

  1. Collaborating with the physicians in the development of clinical integration initiatives based on existing inpatient quality measures
  2. Lending financial assistance and personnel in the implementation of inpatient and outpatient initiatives that provide true community benefit and are not tied to the volume or value of referrals
  3. Demonstrating to payers that the clinical integration program is legitimate and valuable.

What will physicians need to do in order to participate in the Clinical Integration Program?

While the physician leadership, the development of the physician network or the elements of the Clinical Integration Program have not yet finalized, it is likely that physicians will be asked to do the following: Because membership in the Clinical Integration Program will be completely voluntary, physicians will need to choose whether they will participate in the Clinical Integration Program by signing an Addendum to a Network Participation Agreement that is signed by the physician group. Physicians will be required to collaborate with their physician colleagues and the health system in the development and adoption of the Clinical Integration Program – a collection of clinical initiatives that will enhance the quality, service, and cost-effectiveness of patient care. Physicians will need to hold themselves and each other accountable for compliance with the initiatives of the Clinical Integration Program, including its disciplinary and remediation efforts should physicians not meet the pre-established benchmarks.

What clinical initiatives will the Clinical Integration Program include?

Although the Clinical Integration Program is still in the process of development, it is likely to include efforts designed to facilitate and improve:

  • Inpatient EMR and CPOE adoption
  • Ambulatory EMR adoption
  • Chronic disease and care episode management
  • PQRI reporting
  • Communication among primary care physicians and specialists
  • Community case management
  • Quality-based credentialing
  • Protocol development & implementation
  • Care coordination
  • Disease management
  • Quality improvement
  • Data analytics

The goal is that the Clinical Integration Program will enhance the value of the services we provide the patient and payer communities, measuring compliance with the initiatives using data from various sources, including: claims processing and adjudication systems, practice management and scheduling systems, disease registries, pharmacy benefit systems, and hospital and ambulatory EMR systems.

I have heard that the Federal Trade Commission (FTC) has not yet adequately clarified the meaning of clinical integration. Is this true?

No. Since 1996, the FTC has been very consistent in its definition of clinical integration as well as the analytical framework it applies when evaluating clinical integration among a network of independent physicians. As defined by the FTC, a “qualified clinically integrated arrangement” is:

…an arrangement to provide physician services in which: 1. all physicians who participate in the arrangement participate in active and ongoing programs of the arrangement to evaluate and modify the practice patterns of, and create a high degree of interdependence and cooperation among, these physicians, in order to control costs and ensure the quality of services provided through the arrangement; and 2. any agreement concerning price or other terms or conditions of dealing entered into by or within the arrangement is reasonably necessary to obtain significant efficiencies through the joint arrangement

Why are physicians across the country engaging in clinical integration?

Physicians have several motivations for participating in clinically‑integrated networks. Typical reasons include to:

  1. Increase ability to deliver outcomes, quality care and patient satisfaction
  2. Legitimately negotiate with payers as a network
  3. Develop their own alternatives to health plan “report cards” and other initiatives that may not accurately assess physicians
  4. Provide access to electronic tools to enhance patient care efficiency
  5. Allow networks of physicians and hospitals to market themselves on the basis of quality.

How is it lawful for a network of clinically-integrated physicians to collectively negotiate with health plans when the FTC is actively investigating and prosecuting physician networks for negotiating PPO contracts?

The FTC views clinically integrated physician networks as an opportunity to create efficiency and quality in care which can provide greater value to patients and employers (who pay for health insurance). However, the FTC will continue to prosecute those networks that fail to implement true clinical integration or seek to use the approach as a way of simply obtaining greater reimbursement without added value.

If I join SJPHO, can I also join other clinically integrated networks?

Yes. There is no restriction by SJPHO that would prevent physicians from joining other clinically integrated networks. However, many payers or self-insured employers may require physicians to participate in only one clinically integrated network as a term of their contract with SJPHO. Therefore, if the payor or self-insured employer requires exclusivity as a term of the contract signed with SJPHO, the physicians will be required to adhere to the terms of that contract and not participate in another contract with that payor or self-insured employer.

What role does an EMR play in clinical integration?

An ambulatory EMR is not a prerequisite for the development of clinical integration. While a common EMR across all participating physician practices can certainly accelerate and strengthen a clinical integration program, most (if not all) successful models of clinical integration nationwide do not depend on an ambulatory EMR for data on physician performance. One opportunity offered by the anticipated Clinical Integration Program is the ability of the CIN to underwrite a physician office EMR. But still, the Clinical Integration Program will likely begin its efforts to measure, analyze, and evaluate physician performance through claims data, existing hospital data, disease registries, and chart audits.

Why do a growing number of physicians and hospitals believe clinical integration to be a good business and health care strategy?

Doctors and hospitals nationwide are implementing clinical integration programs because they believe in its value proposition:


  • demonstrate their quality to current and future patients
  • choose the clinical measures against which they will be evaluated
  • enhance revenue through better management of chronic patients
  • gather collective support for building necessary infrastructure
  • seek a level of reimbursement that reflects the higher value they can furnish patients and health plans.


  • demonstrate improved outcomes, quality care and patient satisfaction
  • implementation of quality improvement initiatives
  • enhance linkage and alignment with physicians
  • improve performance on hospital pay-for-performance measures
  • position themselves at an advantage in the market on the basis of quality


  • better value for their health care dollar
  • engaged in their care and follow-up process
  • more reliable information to support their choice of health plans, physicians, and hospitals
  • more accurate and meaningful provider ratings
  • greater stability in their relationship with their doctor and hospital

Payers and Employers

  • ability to more effectively manage the health care costs of employees/enrollees and their dependents
  • increased employee productivity and reduced absenteeism
  • lower health care costs over the long term, through the reduction of variation in physician practice patterns
  • more reliable information to support conversion to consumer-driven health insurance products

What is the Medicare Shared Savings Program (“MSSP”)?

MSSP is a payment model enacted as part of the Affordable Care Act that allows physicians and hospitals to share an additional payment above and beyond their normal fee-for-services payments if they succeed in providing care to Medicare beneficiaries at less cost than they otherwise would while meeting quality and patient satisfaction goals. To participate in the MSSP, hospitals and physicians must organize as a type of clinically integrated network called an accountable care organization or ACO.

Can SJPHO participate in the MSSP?

Yes. SJPHO is structured to meet the requirements to participate in the MSSP; however, it will be up to the board of SJPHO (which includes physicians) whether and when it wishes to participate.

If SJPHO participates in the MSSP, does that mean that physicians cannot participate in another network or another Medicare shared savings program?

Medicare imposes two restrictions on participants in the MSSP. First, an entity cannot participate in the MSSP if any of its participants already participate in another Medicare initiative that provides them with a share of savings, such as the Pioneer ACO pilot program. For this reason, the participants in SJPHO must obtain approval from the SJPHO board before they can participate in any other Medicare initiative involving shared savings as a term of the SJPHO Participant Agreement. Second, any physicians who provide the plurality of primary care services for any Medicare beneficiaries cannot participate in more than one MSSP program, as the provision of primary care services is used by Medicare to attribute beneficiaries to a specific ACO entity. This means that primary care physicians and some specialists who provide primary care services may not participate in more than one clinically integrated network for purposes of participating in the MSSP.

If SJPHO contracts with a private payor, will it set the rates that govern how I will be paid?

Not initially. At first SJPHO will only contract with private payers for incentive bonuses to be earned if its participating physicians and SJMC can meet quality and efficiency goals in providing care to that payor’s enrollees and FFS rates will be contracted for separately by the physicians. However, once SJPHO can meet the FTC’s requirements for a clinically integrated network to jointly contract on behalf of its participants, the SJPHO board (which includes physicians) may decide to collectively negotiate with payers for rates as well, at which time the SJPHO contracted rates would apply.

If the SJPHO board decides to negotiate rates, what prevents it from negotiating rates that are less favorable than what the physicians can get on their own?

The SJPHO board is dominated by physicians and the board must approve any terms of contracts entered into by SJPHO. We assume these physicians would not approve contract financial terms, including rates that are not favorable to the SJPHO participants.

What portion of total payments from any payor would be attributable to quality or efficiency goals (i.e. shared savings)?

That depends on the terms of the specific payor agreement. The SJPHO board (which includes physicians) would approve the terms of any agreement that SJPHO would sign.

Who decides the percentage of any payments received by SJPHO that will be shared with physicians?

The SJPHO board (which includes physicians) decides how much of any payments received by SJPHO are distributed to participants, however, the distribution methodology must also consider the infrastructure and other management costs of SJPHO which generally is provided by SJRHN. Accordingly, any distribution methodology must be approved by SJRHN.

I hear that the infrastructure and management costs of any clinically integrated network are high. Will there be anything left to share with physicians?

Yes. The goal for SJPHO is to be able to distribute earned incentive payments to the physicians when they are received. While some of the payments will need to be used to help pay for infrastructure and management costs, we anticipate that not all of the payments will be used for that purpose so that physicians can receive payment for their efforts. Over time, as SJPHO expands to multiple payers and self- insured employers, we anticipate that infrastructure and management costs ultimately will be funded.

Who decides the split of the payments between SJPHO, SJMC and the physicians?

The SJPHO board which is composed mostly of physicians, however the split does need to be approved by SJRHN.

If SJPHO sustains a loss, who is responsible for the loss?

It depends on the contracts entered into by the SJPHO board (which is a physician led board). If the contract provides for SJPHO participants to fund a loss, then that loss will be allocated as the SJPHO board decides. However, if the contracts do not provide for a sharing of losses, then SJPHO will not fund any losses and those losses may fall on SJRHN as additional infrastructure and management costs. At first, we anticipate that SJPHO will not contract with payers under a shared loss methodology. However, the board of SJPHO can decide if they want to share losses in the future. Contracts with shared loss terms often provide for higher incentive opportunities so, at the point in time when the SJPHO board decides that SJPHO can perform well, it may then decide to take on shared losses in order to increase the potential shared savings amount it can earn.

Can SJPHO enter into a tiered agreement with SJRHN for its employee health plan? What about with other self insured employers including the physician groups who join SJPHO?

Yes. SJPHO can contract with self-insured employers, including SJRHN and any of the physicians groups that are self insured.

Will SJPHO be able to standardize quality reporting metrics to reduce burdensome reporting requirements for physicians?

SJPHO may be able to negotiate for a standard package of quality reporting metrics with the payers with which it contracts. However, SJPHO would not be able to affect the quality reporting requirements imposed by governmental or other payers outside of its contracts.

Will physicians who join SJPHO be required to refer patients to SJMC?

No. However, under the terms of payor contracts entered into by SJPHO, payers may establish narrow networks with financial incentives for their enrollees to receive care within the network and, to the extent that SJPHO participants can achieve high quality and low cost care, it is likely they would be selected to participate in such narrow networks.

Does SJPHO interfere with a physician’s ability to practice medicine?

No. SJPHO provides a structure to allow physicians and the hospital to work together differently so that they can improve the quality and efficiency of care rendered to patients. Any decisions that are made relative to the care rendered to patients, however, are made only by the physicians treating those patients, not by SJPHO. The structure allows physicians the opportunity to evaluate the care they are providing in light of cost and quality targets established by payers and self- insured employers with which SJPHO contracts. Thus, the goal is to improve the quality and efficiency of the care that is delivered but the medical decision-making always remains with the physicians to be exercised according to their best medical judgment.

What about data? Will I be required to share data with SJPHO and, if so, how much?

Yes. For SJPHO to be able to coordinate the care of patients to achieve the quality and efficiency goals established by payers and self- insured employers, it will need to have access to data. What data is needed and how it will be obtained are issues that will be decided by the SJPHO board which is comprised of physicians. Because of the need to share patient data among the participants of SJPHO, each group that joins must execute a specially-drafted Business Associate Agreement.