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A Dark Horse in ACO Formation: Large Physician Groups
Kudos to the AMGA (American Medical Group Association) for advancing the cause of physician-led accountable care organizations (ACOs)! A few days ago it “convened leadership teams from 22 leading medical groups and organized systems of care at the inaugural meeting of the AMGA ACO Development Collaborative”.
In many communities, hospitals (delivery systems) will be the “natural” organization to lead an ACO. Hospitals bring management expertise, IT, capital, and community relationships to the table as important assets.
Questions about Hospital-Led ACOs
I’ll try to keep an open mind, but I question whether hospitals are best positioned to lead ACOs:
- Hurdle 1: Intentions. What are hospital leaders thinking in their heart-of-hearts? Are they viewing ACOs as a way to truly develop patient centric, collaborative care or as a means toward consolidating market power against payers? We really don’t know. See David Harlow’s excellent analysis of up-to-the-minute developments on ACOs and antitrust issues.
- Hurdle 2: Culture, Processes, Systems. Assuming hospital leaders have the purest of intentions in forming an ACO, bringing along the rest of the organization will take time — a lot of time. Effective ACOs will require hospitals to shift from “admissions and procedures as revenue” to “admissions and revenue as costs”. This is a huge shift.
Physician Led ACOs Show Promise
As documented in a recent article in Health Affairs, large physician groups have demonstrated success in reducing costs and improving clinical quality. The Council of Accountable Physician Practices (an affiliate of AMGA) also provides substantial evidence of success.
What’s the compelling logic here?
It’s pretty simple and straightforward. The majority of potential cost savings will result from reduced hospital admissions and procedures. It’s highly questionable whether the shared savings payment model of the Accountable Care Act provides enough incentives to hospitals to transform from “hospital as revenue center” to “hospital as cost center”.
Physicians don’t have these mixed incentives. Of course, physician groups will have their own set of challenges.
I trust and expect that we’ll see many ACO models tested, but at this early stage I’m willing to bet on some dark horse physician groups to stand out.
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Very interesting topic and analysis. I agree with what you just wrote Vince. The super physician-owned IPA with strong HIE/EHR support will win ACO battle I believe. I bet on dark-horse physician groups too. Ultimately, physician executives are trained to think of patients’ values first, then revenue for a sustainable model. Linh.
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