The entire triad -- hospitals, physicians, and insurers -- is usually comprised of a power struggle revolving around which one ends up dominating a local market. In the Marcus-Welby case, insurers seems to have been the first to 'get its act together', but if a critical band of physicians band together, they could dictate the terms under which they will join the network, and thus preempt or overturn the high level of prices raised by the insurers. Requirements for success

Clinical care seems to be the most significant variable (Burns et al., 1994; Zuckerman & Kaluzny, 1991). To the extent the more value the service can offer the greater its amount of success. Findings also demonstrate that the greater the degree of perceived physician-system integration, the greater the system's inpatient productivity (Shortell et al., 1994). Furthermore, it has been found that the greater the percentage of physicians practicing in primary care groups, the greater the system's total operating margin. Moreover, managed care activity has been greatest amongst systems that have more physician involvement in top system management positions and with more physicians practicing in system-owned or affiliated practices (Zuckerman & Kaluzny, 1991). MWH could use these pieces of information...

In short, " to maintain and build their census, hospitals must protect and widen their physician referral base" (Burns, 1995, p.2). The bottom line is the demand for 'value' which the PHOs, being independent, are best able to provide and thus deflect insurance. If the hospital can provide it too, it likewise may find a manner in which to circumvent its problems (Shortell et al., 1994), by focusing on its physician base as its most valuable resource.
Sources

Burns, L.R. (1995) Models of Physician-hospital organization: Possibilities and pitfalls Health Care Systems, 2, 1-4.

Burns, L.R., Chilingerain, J.A., & Wholey, D.A (1994) the effect of physician practice organization on efficient use of hospital resources, Health services research, 29, 583-603.

Burns, L.R., & Thorpe, D.P. (1993). Models in Physician-Hospital Organization, Health Care Management Review, 7-20.

Shortell, S.M., Gillies, R.R., & Anderson, D.A. (1994). The new world of managed care: creating organized delivery systems Health Affairs, Vol 13, Issue 5, 46-64

Zuckerman, H.S., & Kaluzny, a.D. (1991). The Management of Strategic Alliances in Health

Services, Frontiers of Health Services Management, 3-23