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What Physicians Can Learn from an Unusual Business Model


Ocean Spray Cranberries is the perfect analog for an independent practice association – a cooperative comprised of independent entities with central operations.

It was decades ago, and, at the time, I did not appreciate studying how cranberry farmers created a cooperative. I didn't believe it had any relevance to anything. You're probably wondering how there is any relevance of cranberry farms to physician practices, but, there is, and, it is timely.

Back in 1930, cranberry farmers were being beat up by the depression and victimized by distributors. Three farmers banded together to create their own processing and distribution company. Others joined, and in doing so, they created an entity that they owned and controlled. This allowed them to buy their crops and sell them into the market, capturing revenue and profit every step of the way.

Today, Ocean Spray Cranberries is a $2.2 billion company owned by 700 independent farmer members.

A similar opportunity exists for physicians today in accountable care organizations (ACOs). The value of controlling the supply and distribution chain is at an all-time high. It is founded on an age-old adage: "He who controls the gold makes the rules."

When physicians own, manage and control the continuum of care, three things happen:

•Communication, collaboration and quality of care improve substantially.

•The cost of care goes down and the population health status goes up.

•The dynamics of control and earnings flip 180 degrees from hospitals to physicians.

The obvious question is "Why don't physicians band together into ACOs' in droves? Because doing so requires a transition from retail medicine to managing medicine, from fees to value based reimbursement. Operationally, from being a service provider to being a clinical manager. All of that takes time, technology, expertise and money. The less expertise you have, the more money is needed to pay for the mistakes of on the job training.

There is also a substantial element of risk in having to deliver often subjectively measured and measurable value towards a largely uncertain outcome that can be heavily influenced by circumstances out of your control. Leaving a world of performing easily quantifiable tasks, regardless of their complexity, with no consequences except for gross negligence is the penultimate exit from ones' comfort zone.

Risk – reward. The deeper into the comfort zone, the lower the risk.

Hospital ACOs are comfort zones. No risk, few expectations, modest participation awards - enough to meet low expectations, ambitions and self-esteem – and, for some, to curry favor.

Physician ACOs come in two types: ego driven and results driven. Obviously, the latter is preferable to the former.

Still, of all of the options, the one with a proven track record of achievement, leadership and innovation is the one to ride to the finish line. Promises are cheap and easy. Achievement is neither. The only thing worse that making a bad choice is making no choice.

Three cranberry farmers could have easily given in and given up during the Great Depression. Instead, they saw opportunity and seized it. Facing the unknown is not easy, particularly if you mistake working as a team as losing autonomy when it's really gaining freedom.

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