Who Will Control the Accountable Care Organizations? Print
Written by Bernd Wollschlaeger, MD   
Wednesday, 24 November 2010 10:45

Follow this link  to an important article "Physicians versus Hospitals as Leaders of Accountable Care Organizations" which was published recently on the New England Journal of Medicine website. I urge you to read the article and want to point out several important messages.

The next few years will be a period of what economists call  creative destruction.  Our fragmented, fee-for-service health care delivery system will be transformed into a higher-quality, higher-productivity system with strong incentives for efficient, coordinated care.  Consequently, the actions of physicians and hospitals during this period will determine the structure of the delivery system for many years.  The implications will be profound for hospitals' dominant role in the health care system and for physicians' income, autonomy, and work environments.

The Affordable Care Act (ACA) aims to improve the quality of care and reduce costs. Doing so will require focused efforts to improve care for the 10% of patients who account for 64% of all U.S. health care costs. Much of this cost derives from high rates of unnecessary hospitalizations and potentially avoidable complications.  These, in turn, are partially driven by fee-for-service incentives that fail to adequately reward coordinated care that effectively prevents illness. The ACA includes numerous provisions designed to catalyze transformation of the delivery system, moving it away from fee for service and toward coordinated care.

Incentives for the development of the information systems and infrastructure are necessary for better and more efficient management of chronic conditions.  Achievement of this level of care coordination will require the development of larger integrated delivery organizations, preferably, accountable care organizations (ACOs) that incorporate primary care practices structured as patient-centered medical homes and that can support new investments in information systems and care teams and can maintain service hours resembling those of retailers. A move toward ACOs will mean major changes in the structure of physicians' practices, since even physician-group based ACOs may include one or more hospitals.  Please note they may instead contract with hospitals for specific services chosen on the basis of their relative value.

A crucial question is who will control these ACOs. We can envision two possible futures: one of physician-controlled ACOs, with physicians affiliating and contracting with hospitals, controlling the flow of funds through the marketplace; and one of hospital-controlled ACOs that will employ physicians. Whoever controls the ACOs will capture the largest share of any savings.

For physicians to control ACOs, they would have to overcome several hurdles. The first is collaboration: ACOs will require clinical, administrative, and fiscal cooperation, and physicians have seldom demonstrated the ability to effectively organize themselves into groups, agree on clinical guidelines, and devise ways to equitably distribute money.

If hospitals are to control ACOs, they, too, will need to overcome barriers. First, they will need to trade near-term revenue for long-term savings. Hospitals are typically at the center of current health care markets, and by focusing on procedures and severely ill patients, most have been fairly profitable. Building an ACO will require hospitals to shift to a more outpatient-focused, coordinated care model and forgo some profits from procedures and admissions.

Holding off on creating ACOs is likely to be a bad long-term strategy for physicians.  Therefore, the actor who moves first effectively is likely to assume the momentum and dominate the local market. A wait-and-see approach could succeed if the first mover executes poorly, failing to coordinate care and manage risk. But rather than controlling destiny, cautious actors will be hanging their fate on the mistakes of others.

Last Updated on Monday, 27 December 2010 22:16