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High-performing Physician Networks: The Ideal ACO


Why a high-performing physician network could be an incredibly profitable business model.

The most promising near-term model of healthcare delivery that can deliver long-term financial stability, improve outcomes, and preserve independence, particularly for physicians, is assuming performance risk.

Instead of stopping here to check your 401(k), the latest job offer, or the nearest bridge, consider this: There has never been an opportunity so lucrative, accessible, or manageable for physicians. Andeveryone wins.

How so? Insurers don’t manage risk - they can’t control the process or the outcomes, so they will reward you to manage it - just your part of it. And, why should you want it? Because, as a physician, you have control. Virtually nothing material in the continuum of care happens without your authorization. You have trained intensively. You know what to do and how to provide the right care at the right time, for the right price, and to deliver improved outcomes for your patients and their families.

Still not convinced? There is so much waste in the healthcare system that the ownership and management of such a network could be an incredibly profitable business model. Don’t take our word for it; the Institute of Medicine did the math, and conservatively estimates $750 billion in annual waste -in 2009 dollars.

Contained integrated narrow provider networks that can manage patient flow are the only proven delivery systems that can consistently eliminate waste and reduce the cost of healthcare.

Every dollar spent that is higher than the lowest cost obtainable within a given market for that service is waste.  All waste is potential profit for those entities that are at financial risk, and the only entities that can control the risk are those with prescription pads, which underscores why providers who are both at risk and control the utilization and pricing of downstream services are the only ones that can create market-based controls on healthcare costs - and the rewards.

So the model is clear. Build a primary-care provider entity that can improve the patient experience, manage the costs and utilization of downstream services, and safely remove 25 percent or more of the waste currently in the healthcare system and engage with payers in value-based contracts as a road to risk. From a social perspective, imagine if the delivery network retained one third of that savings for profit and returned the remaining two thirds to the actual purchasers of health care in the form of premium reductions. We actually could afford to insure all Americans without bankrupting the nation!  And we could do it voluntarily using free market forces. Just to highlight the math, that is a pot of $250 billion dollars in potential profit per year.

While many primary-care providers have yet to recognize that their value to the healthcare system no longer lies merely in providing services, but rather in the successful cost management of populations based upon the strength of the patient-provider relationship, those who do, and act, will lead the way to the future and be rewarded for it. Change is hard, and reinvention is even harder, but the alternative for most is to succumb to total loss of independence and to answer to those who have.

Success will require strong leadership, shared effective governance, integrated timely actionable information that can be shared across providers at the point of care, the creation of price transparency for high-cost services, effective contracting, and a team-based primary-care model where the routine care is done by mid- and lower-level providers working at the top of their licenses with physicians caring for the most complex and complicated patients.

Quality improvement, aligned incentives, shared common goals, process redesign and an absolute essential - care coordination and patient communication systems that include intensive training, support, and adaptability -are the tools.

If you don't manage care, you really cannot manage risk, which, of course, is why health plans look for certainty rather than risk. Few are truly engaged in reducing the risk of populations in a meaningful way as foreseen in the ACO model so far, although some self-insured employers are trying. 

Private consulting companies with the experience, expertise, and population-management tools will be arising in the near future to do the heavy lifting. Watch for them. Vet them. And, choose wisely.

Dr. Bonvicino is a former Regional Medical Director at the Garden State Medical Group and former senior medical director of Horizon Healthcare Innovations and Blue Cross/Blue Shield of New Jersey.

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