What physicians should believe about Accountable Care Organizations

by Jeffrey L. Cohen

In the 90s, physicians were told “The sky is falling. You have to find a tree to stand under or you will be crushed.” The “trees” were things like IPAs and PHOs. The future outlook was bleak. All patients were going to be part of some system with which the physician would have no input or control. Decisions would be made on purely business grounds. And the end of fee for service medicine was at hand. Not.

Here we are today in the face of a national healthcare reform drive. Again, any claim the sky is falling and civilization as we know is will be undone. It is the end days for private practice of medicine. Not.

The truth is clear: this is a time of serious change in terms of how the United States intends to view and approach the delivery and payment of healthcare. The creation of Accountable Care Organizations (“ACOs”) and the dominant role of insurance companies and Pharma sound terrifying. terrifying. Clearly, the stated intent is to reduce cost and improve outcomes.

Things like clinical pathways are coming back into focus. Discussions about Physician Hospital Organizations (PHOs), Independent Practice Associations (“IPAs”) and Super LLCs are being renewed and reconsidered against the changing landscape. The market that once existed for sellers of medical practices has withered. Certain specialties, like cardiology, are being hit extremely hard with cuts not only on physician services, but also on diagnostic imaging services that drive a lot of revenue to them. And once again the gong of the death of solo and small practices is being banged once again. Physicians are understandably frightened.

Change is change. It upsets people. And this is not the first time in the past 20 or so years that physicians have been at the butt end of it. That said, they should be wary of the “end of days” salesmen, those which sell products and strategies based on the assumption that life as they know it will end. Physicians should take a hard and long look at the things they are being asked to buy in order to survive the coming tsunami. Does the vendor have an economic stake in the decision? Buyer beware.

So, what are the most popular myths floating around now?

1. You have to spend a lot of money very quickly to comply with the HITECH Act and to get the incentive money for using EMR. Wrong. In fact, physicians that jump quick are likely to get sold stuff that is expensive and doesnt work. Instead, take your time to have an IT expert with no products to sell evaluate your IT needs and see what the most workable options are. Spend more time on the “shoe fitting” and take your time making a decision to buy.

2. Physicians that are in small and solo practices will die off quickly. The simple truth is has always been that small practices are, generally speaking, economically inefficient and limited. Thats not new! What is new is that there are more economic and regulatory pressures and any healthcare reform will be paid, in part, by payment reductions to physicians. Mega groups are an option,
but just one. Look at all forms of alignment and integration, including IPAs, PHOs and others.

3. Mega practices rule. Nah. It really depends on the “glue” of the practice. are they together simply to get new revenues from ancillary services? Many are, and that does not create great strategic advantages. The bottom line in terms of market position is (and always has been): a financially efficient business model (low expenses and high income) which accomplishes and demonstrates value.

4. Accountable Care Organizations will be physician led. Though the opportunity certainly exists and think-tankers favor physician led ACOs, the simple truth is that creating ACOs requires huge time availability, business expertise and capital, the very things that physicians are most challenged by. That said, physicians are at the center of any ACO model and their participation and leadership in ACO development and operation is critical.

5. This is the end of fee-for-service medicine. Probably not. Though the legislation clearly identifies FFS compensation as the villain for our country’s healthcare spending, and though risk based compensation will likely play a larger role, some of the Stage 1 cost savings models pay on a fee for service basis. Moreover, it is important not to become entranced entirely with the insured market. There is a First Tier market of proprietary products and models, like VIP and Concierge practices which will likely grow for high patient contact practices (e.g. cardiology, internal medicine, diabetes).

I personally do not see the end of the medical world, though I do see big changes over many years. I do not see the end of the solo or small practice, though I do see more economic stresses. And I do not see a “one size fits all” solution at all. The options require careful and calm analysis. And the old hard-won strategies that have always won will always win:

1. Increase profitability by any legitimate means that is sustainable. For instance, practicing medicine with a bunch of other physicians you do not want to be around or speak with may be profitable but not sustainable;

2. Make your lifestyle more digestible, a particularly challenging request in sunny South Florida; and

3. Ensure that any strategy you enact include (a) increasing reliance on workable EMR, and (b) tracking, improving and communicating clinical outcomes.

Change is here. More change will come. It is not an end, but rather always something new, surprising and never quite as awful as anticipated. Healthcare reform is less a thing than a conversation at this point. That said, we should all be proactive in plotting our futures. Be adaptable. Be smart. And be patient.

Jeffrey L. Cohen is a healthcare attorney who blogs at ACO Watch.

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