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ACOs under Fire Despite Sound Concept


Physician-run accountable care organizations have a great track record of success due to one key element: the doctors that oversee them.

Health policy expert Kip Sullivan recently posted an op-ed entitled, “On the Ethics of Accountable Care Research.” While the subject is rather dry, it inadvertently opens the door to one of the most expensive miscalculations of the century.

Sullivan’s perfectly logical questioning of the ethicality of health system-generated research papers touting statistically insignificant results as triumphs misses the real point. In focusing on the validity of a teacher’s grading curve, he missed the obvious: The class is gaming the system.

Only Washington, D.C., could gin up a program to favor hospital systems without comprehending that they were pressuring them to cannibalize their core business, split the results with CMS, then split a legally mandated two thirds with the doctors, then pay their costs out of the rest.

Good idea, but the execution is poor. But there’s hope of sorts. Despite the accountable care initiative, far more vulnerable than Obamacare, being circled as easy prey for elimination by D.C. policy lions and pundits, it is undeserving of this fate for a single, compelling reason: Primary care physician groups independent of hospital obligations are making it work.

Independent primary care physicians are focused on providing better value for their patients because they are incentivized by the new money in healthcare from delivering value. And that includes huge incentives to invest in keeping people healthier and to control the myriad medically unnecessary revenue opportunities that make the healthcare industry engine well fueled.

The broad delta between a bloated, wasteful, and ineffective system and the improved one you create can restore fiscal stability to primary care physicians, who are on the verge of being priced out of business. Primary care physicians are the key because they can be very effective-and less costly- clinical managers for a patient’s overall care.

They are also a threat for the same reasons, which is why physician-led accountable care organizations (ACOs) are presently destined to be small and relatively inconsequential. Hospital systems have been buying up their potential participants for years. Medical practices are money pits for hospitals that more than make up their financial burden through reliable referrals to their far more expensive hospital diagnostics and outpatient services. If you’re four or five times the cost of the competition and can’t control the prescription pad, own the pen to own the market. Own the market and the upstart riff raff primary care docs and their little ACOs are just a nuisance.

So as not to be misunderstood, hospitals have their place. They are essential community assets and you need big institutions to do big things.

Let’s be real, however. Looking for savings from the people who are responsible for managing health crisis is exactly the wrong place to look.

Looking for savings from the people who are responsible for managing patients’ health is exactly the right place.

That’s why non-hospital-affiliated, physician-governed, professionally managed ACOs consistently and substantially outperform hospitals by managing utilization and site of service based on value and having and taking long-term responsibility for their patients. Physicians understand that improving health status – keeping people healthy by preventing and managing chronic disease by slowing, stopping or reversing its progression – is the only way to succeed long term.

That is the fundamental problem not only with the ACO system, but, with the entire governmental concept of healthcare. Healthcare is not paying for services. It is providing them.

In a truly American tradition, put providing that care in the right hands by equipping, enabling, and empowering their healthcare representatives: physicians. They are not going to spin and sell. They are just going to get the job done.

The mechanism to do so is both simple and fair. Disqualify ACOs that chronically have not or cannot generate statistically meaningful savings in areas that they can and should control to make room for a proven entity to fill the void.

The rest will take care of itself.

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