Why physicians may not buy into ACOs

I’m sure Ezekiel Emanuel hates being referred to as Rahm Emanuel’s brother, so I won’t describe him as such. After working as one of Obama’s main health care advisors, he’s now at U-Penn in a job spanning medicine, economics, and ethics. He’s also been writing engaging essays in JAMA about health care reform and economic change, that give us an augur into where health care reform might lead us.

Here, Dr. Emanuel answers the question, where do our 2.6 trillion health care dollars each year actually get spent? On the way, he’d like to refute some myths you may have heard about where major costs can be squeezed out of the system. First, the myths:

  • Malpractice costs: Nonpartisan Congressional Budget Office estimates say that aggressive tort reform in all states would reduce costs by only 0.5% per year ($11 billion).
  • Insurance company profits: Profits from the 5 biggest insurers were only 0.5% of health care costs.
  • Drug costs: Switching to Canadian sourcing and maxing out generics would only get us $3 billion / year.
  • “Million Dollar Babies”: About 10,000 adults and kids use more than $1 million/year in health care costs; that’s $10 billion. Dropping the threshold to $250,000/year gets you ~$169 billion to work with. This is where rationing would start, but no one wants to be on the first death panel.

Doing all these things together might get you $15 billion to $20 billion, he argues, but it’s a haphazard approach. I would add, the political theater surrounding attempted changes at any of these levels would be absurd and outrageous, limiting their success.

Where is the money, then? It’s in the 10% of the population with chronic diseases, who consume 64% of health care expenses. In other words, the patients we see day in, day out, who fill the clinic and hospital O.R. schedules (and make their cash registers ring).

The solution, Dr. Emanuel reminds us, is embrace of accountable care organizations and capitated disease management systems as the only way to reduce these patients’ frequent hospitalizations, preventable errors and readmissions. Rather than complaining, we physicians need to get organized and take a leadership role to make this new era of high-quality, low-cost health care happen.

Dr. Emanuel, I’m all for it. I believe you, and I’m ready for wholesale change of our broken and bankrupt “system.” But then again, I don’t have a private practice whose steady income is paying my mortgage, retirement fund and kids’ education. After making the rounds of practicing pulmonologists over the past few months, I can tell you that they are going to foot-drag and fight any change in their practice-and-payment habits with tooth and claw. From what I hear, other subspecialists feel the same. Given that these docs in small retail practices still represent a large majority, the kind of cheerleading in this essay is disconnected from reality. Besides, in what fashion are these small-scale docs expected to organize? They have no bargaining leverage with corporations, little organizational infrastructure, virtually no capital reserves or margin for error, and no clue what’s expected (since no one does, right now).

Small physician practices will join ACOs when insurance companies and the government force them to do so to get paid (which incidentally would require someone actually forming one so we see what an ACO is), or when the financial incentives involved are a no-risk giveaway. What middle-aged docs are really banking on is that the time horizon for serious restructuring can get stretched out to their (early) retirements — and they’ll do whatever they can to slow down this particular hope and change.

Matthew Hoffman is a fellow in pulmonary and critical care who blogs at PulmCCM.org.

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