Accountable Care Organizations (ACOs)

The number of Accountable Care Organizations (ACOs) has grown significantly since the implementation of the Affordable Care Act. ACOs now provide care for 15-17% of Americans, according to Forbes.

For many patients, ACOs are improving the quality of care provided by hospitals, post-acute facilities and other health care facilities. “Shared Savings Program ACOs improved on 30 of the 33 quality measures in the first 2 years,” reported the Centers for Medicare & Medicaid Services.

While there is evidence of success, improving ACOs is still a government priority. Challenges have resulted in ACOs dropping out of government incentive programs, dismantling and/or lacking in improvement initiatives.

Obstacles Challenging ACOs Nationwide:

1. Adjusting to the new evidence-based reimbursement system
2. Low staff to patient ratio, leading to exasperating caseloads for physician and nurse practitioner (NP)
3. Outdated technology
4. Inefficient leadership and/or management
5. Insufficient number of qualified physicians
6. Communication barriers between physicians and collaborating facilities

The Patient Protection and Affordable Care Act (PPACA) gives new impetus to physicians to form accountable care organizations (ACOs) to better coordinate the care of their patients, especially those with chronic diseases, and to ensure a continuum of care. Of course, the devil is in the details.

Before we get into those details, some background is needed. An ACO, which may affiliate with a hospital, consists of a group of doctors working together under one legal umbrella. ACOs create incentives for healthcare providers to treat an individual patient across care settings–including doctors' offices, hospitals, and long-term care facilities. Various models exist. Some ACOs consist only of primary care doctors, whereas others include specialists. When ACOs own the practices, its doctors are employees. Well-designed
integrated delivery networks such as the Mayo Clinic, Geisinger Clinic, Cleveland Clinic, and Marshfield Clinic could be reorganized to comply with the new Centers for Medicare and Medicaid Services' (CMS') definition of an ACO under the PPACA.

The PPACA specifies that an ACO may include the following types of groups of providers and suppliers of Medicare-covered services:

• ACO professionals (that is, physicians and hospitals meeting the statutory definition) in group practice arrangements;
• networks of individual practices of ACO professionals;
• partnerships or joint ventures arrangements between hospitals and ACO professionals, or
• hospitals employing ACO professionals; and
• other Medicare providers and suppliers as determined by the secretary of the Department of Health and Human Services (HHS).

On March 31, CMS proposed new rules and incentives to help doctors, hospitals, and other healthcare providers better coordinate care for Medicare patients through ACOs. The Medicare Shared Savings Program will reward ACOs that lower growth in healthcare costs while meeting performance standards on quality of care and putting patients first. Patients and provider participation in an ACO is purely voluntary. Under the above proposal, ACOs would coordinate and improve care for patients with Original Medicare–Medicare Parts A and B. ACOs would have to meet high quality standards to ensure patients are satisfied with the care they receive and have better health outcomes. And, if ACOs can help save money by getting patients the right care at the right time, they can share in those savings with Medicare. As proposed, ACOs also would have to pay back Medicare for failing to provide efficient, cost-effective care. The new program is set to begin on January 1, 2012.

ACO ALTERNATIVES

A "hybrid" alternative to the ACO model described above brings together certain segments of the private practice community physicians, primary care physicians, and specialists, under a legal umbrella. This hybrid model can affiliate with hospital(s). The physicians in this ACO provide care for patients under "fee for service" or the ACO can contract to care for a segment of a population under a "risk-sharing formula." Because the providers are under one umbrella, medical care can be coordinated to be successful. This hybrid ACO has to pay particular attention to not unduly control the providers nor make money off the practices.

Another model operates virtual, networked systems for private practices using Web-based health information technology to achieve true integration of patient care across a community. These practices are located in multiple locations and operate as separate entities linked together clinically through a common electric health record (EHR) system. Using this electronic link, this model can coordinate patient care, fulfilling the requirements of an ACO.

Any healthcare reform or ACO must put serving patients first by improving quality, efficiency, and customer service, and by decreasing cost, waste, bureaucracy, and errors. If we were able to design from scratch a "practical" ACO that meets these criteria, what would it be?

First and foremost, all parties must put aside their individual interests. Because we live in a democratic, capitalistic society, and because we are dealing with human nature, we have to consider each stakeholder's interest to make it successful. We always should remember to not diminish the fundamental mission of an ACO. Some government programs are proposing a "risk-gain" model for ACOs. The government formula is not clear and can change from year to year. It is imperative that an ACO be formed to take better care of patients at lower cost, rather than be formed just to chase federal or state money. The latter reason to form an ACO is ill advised. However, if an ACO is first formed for the correct reason, and has the proper infrastructure and business plan, it can then entertain the idea of participating in the federal/state programs.
 

CREATE A WIN-WIN

The U.S. capital market is successful because of a mixture of many small businesses and some large corporations. The entrepreneurial spirit with the 24/7 working mentality is the hallmark of small business enterprises. Private practice community doctors are small business entrepreneurs who function best in their own element when they have oversight over their practices. These community private practices may be small but usually are run very efficiently and do not go bankrupt.

When PhyCor, a publicly held physician practice management company, was recruiting to buy practices in New Haven, Connecticut, in the 1990s, it stated that small private practices would be a thing of the past. A solo, private-practice doctor from Hamden, Connecticut, countered that PhyCor would go bankrupt before him. True enough, PhyCor is gone and this doctor is still in practice with a large following of patients.

Although these small private practices may not have the so-called "economies of scale," they operate with low overhead without layers of bureaucracy. Economy of scale sounds good, but it can be elusive. These small business enterprises know their sources of revenue and how to collect it. They know their overhead and where every dollar is spent. The appointment schedulers know their providers well, some having worked for their bosses for years or even decades. Instinctively, they know when and where to add a patient without disrupting the provider's schedule. They know which patient should get a courtesy discount and which unpaid accounts should be sent to the collection agency. Such local-level attention to details should be part of any ACO's business plan.

The above comments are not meant to put a value judgment on either system, but merely to point out some of the realistic day-to-day pitfalls that lead to increased overhead and decreased efficiency. The comments point out that it is an exercise in futility for institutions to purchase doctors' practices and try to manage these offices to increase efficiency in the name of "economies of scale." Doing so leads to frustrations on both sides, and the history of the 1990s may repeat itself. Besides, once the practice has been bought, even if the physicians are paid through many various bonus schemes, the productivity of the physician is never the same as when he or she was a private-practice entrepreneur. This fact of life has to be factored into the business plan of any proposed ACO.

A PROPOSED STRATEGY

The institution or any administration forming an ACO should not plan to make money off the doctors' practices. The institution or the ACO will do well by creating user-centric facilities that allow the doctors to provide their medical/surgical services efficiently for their patients and with great customer service. The institution must operate within its core businesses, "in the facility business," and makes its profit in that mode. By the same token, the doctors should be in their core profession/business, which is practicing medicine or surgery.

To increase efficiency and enhance customer service, the doctors within their practices should have the ability to obtain certain low-cost diagnostic tests and the results within their practices. This ability is not as much to generate revenue as to make things convenient for the patients. This way, the patients do not have to wander around town to get the tests or wait for days for the results. The ability to have a diagnosis made during the same office visit and within the same office setting brings great convenience and comfort to the patient. Additionally, treatment can be started right away. Having these simple diagnostic tools in the physicians' offices, as well as having the ACOs' caregivers readily available to their patients diminishes, the number of emergency department visits. It saves costs and enhances patient satisfaction.

The second tier of tests, more sophisticated, high-cost tests, should be centralized to be more cost-effective and achieve better quality control. Through a "tests and referrals" tracking system, within an EHR system results of such high-tech tests should be available, reviewed by the doctor in a timely manner, and the patient informed of the results as soon as possible.

The purchase of professional liability insurance through the ACO and its affiliated hospital(s) also could be centralized. Doing so creates a win-win for the institution and the providers.

The group purchase of health insurance also can be centralized. However, in doing so, one has to offer multiple option plans, as a one-size-fits-all approach does not work. Each practice needs to be able to determine the level of health coverage for its staff. By the same token, each practice knows its staff well and each practice needs to determine the compensation and benefits for its staff.

An efficient, user-centric EHR system reduces staff and reduces the floor space for paper chart storage. It is true that an EHR system allows clinical information to be stored in a digital structured data format and can be pulled for review, analysis, and to compare doctors' performances. However, an EHR system that does not have a user interface that is extremely intuitive nor follows the workflow of the patient/doctor encounter can be disastrous, creating huge bottlenecks, decreasing efficiency, and generating a new host of medical errors. It leads to loss of revenue for the doctors, and the institution also loses revenue because of decreased utilization of the institution's facilities. Besides, the office staff is rattled because instead of caring for the sick, the doctors and their staff become key punch operators. The ACO's EHR system needs to have a user interface that follows the day-to-day workflow of the physician, one that allows the caregiver to capture the richness of the sacrosanct patient history taking and the unique physical findings of each patient.

The following steps are what enables the physician to provide quality care without error: the uninterrupted carefully taken history; the undistracted, astutely performed physical examination; and the focused deliberation to analyze the history; the physical, and the test results. The EHR system's user interface has to enable the physician to access the results of all the tests from his or her portable tablet from a secured Web server within seconds. The EHR system must enable the physician to do all the above while keeping eye contact with the patient. An ACOs should offer this user-centric interface module for the physicians.
 

DEFINITE TIME AND PLACE

There is a definite place and time for forming a practical ACO. However, a new strategy can be like fire. ire can warm our houses, cook our food. If misused, it can kill us and burn down our homes. For example, the Health Insurance Portability and Accountability Act (HIPAA) is a good rule, but due to its poor implementation by many, it has caused great frustration among patients and physicians. Ridiculous as it may sound, HIPAA has inadvertently raised the cost of healthcare. Numerous tests had been repeated because it was easier to repeat the tests than to obtain the test results ordered by another provider.

If we collaborate, combining the wherewithal of large corporations and the energetic spirit of the small businesses, we can deliver the answer that healthcare reform is waiting for. The practical ACO needs both primary care providers and specialists.

Let's take the time and energy to form the practical ACO with the main goal "to serve," not "to control" or "profit" from another profession, and not to create an unnecessary bureaucracy that increases costs to our unsustainable national healthcare spending. We need to centralize only those items that bring value, do not decrease efficiency, and do not dampen the entrepreneurial spirit of the community small businesses. It can be done. Any geographic area with a large number of private practice community physicians may be the place to showcase a successful and practical ACO.