Physicians Leading Majority of ACOs

By Debra Wood, RN, contributor

June 16, 2014 - Although initially many people expected hospitals to dominate the accountable care space, an analysis of data from the first national survey of public and private ACOs found physicians are holding strong leadership and ownership roles in more than three-quarters of accountable care organizations.

Bill Fera: Physician-led ACOs are not hurt financially by reduced readmissions.
Bill Fera, MD, explained physicians are not losing out financially by reducing unnecessary hospitalizations, while hospital-based ACOs face revenue reductions in the current payment system.

“It’s a great thing,” said Bill Fera, MD, principal of the advisory health care practice for EY America based in New York. “When you have large change management programs, you need to have people from the rank and file leading the charge for foundational change.”

Carrie Hoverman Colla, PhD, assistant professor at the Dartmouth Institute for Health Policy and Clinical Practice in Hanover, N.H., and colleagues explored the leadership of 292 emerging ACOs, defined as a “group of providers that are collectively held accountable for the total cost and quality of care for a defined patient population.”

The investigators found 51 percent of the ACOs were physician led, and physicians and hospitals jointly led another 33 percent. Only 3 percent of the ACOs were being led by hospitals alone, and the rest, 13 percent, had other leadership.

“I didn’t expect the proportion of solo hospitals to be so low,” Colla said.

Terry Fouts: Physician leadership important for ACO success.
Terry Fouts, MD, said clinical leadership is important to ACOs’ success.

Terry Fouts, MD, chief medical officer of MedeAnalytics, a healthcare data analytics firm in Emeryville, Calif., working with ACOs, payers and hospitals, was not surprised with the number of physicians involved in ACOs.

“Anytime I sit at the table [with groups developing accountable entities], there will be physicians and, hopefully, nurses with a case management background taking a leadership role,” Fouts said. “Clinical leadership is important to be part of this whole thing.”

Ron Calhoun, managing director of the Aon Risk Solutions health care practice in Charlotte, N.C., said the current number of ACOs has reached more than 600, but about half remain physician-led. Those physician-led ACOs tend to be smaller, with fewer than 10,000 lives covered.

Advantages of physician leadership

“Previous research showed that involving physicians in the governance improves communication within the organization and builds trust within the organization for clinical staff and assures patients their needs will be considered,” Colla said.

Kathryn Hickner-Cruz: Physician leadership builds trust.
Kathryn Hickner-Cruz reported physicians are skilled at building trust and teams.

Kathryn Hickner-Cruz, an attorney with The Health Law Partners in Ohio, agreed that physicians are skilled at building trust with other people, including with fellow physicians and bringing together a team.

“There’s a commonly held belief that physician-led organizations always do better,” Hickner-Cruz said.

“Financially, it makes perfect sense for physician organizations to be in a position to have a positive impact without the deleterious effect in the current model,” added Fera, explaining that efforts to decrease hospital admissions reduce revenue for the hospital in the current fee-for-service environment, but that’s not the case for physicians.

“We believe that strong physician leadership, using evidence-based best practices, is absolutely critical in organizing and directing effective care delivery for an ACO,” reported Hank Osowski, cofounder and managing director of Strategic Health Group in Burbank, Calif. “It is physician engagement with patients that seems to be the key ingredient in keeping beneficiaries aligned with and remaining within the structure of the ACO.”

Laura Beerman, director of customer segment analysis at the Decision Resources Group in Burlington, Mass., called having primary care physicians at the center of care “a no-brainer.”

Laura Beerman: Physicians need to be involved in ACOs.
Laura Beerman said physicians need to be involved in ACOs.

“Part of the care strategy is to put physicians firmly in the lead position,” Beerman said. “Physicians can’t not be involved.”

Physicians look at the population health management with a different perspective than financial experts, Fouts explained. Clinicians segment the population into subsets and determine what discipline can best assist the patient. For example, a respiratory therapist might be the best person to explain to a patient with asthma how to use an inhaler. Keeping those patients out of the emergency department for unnecessary visits will be vital to the ACO’s financially viability.

ACOs will not succeed without clinician leadership, Fouts predicted. Fouts suggested that physician leaders surround themselves with expertise in financial planning, underwriting and risks.

That’s exactly what Francisco Perez-Mesa, MD, and Ivan Lavernia, MD, have done at Accountable Care Options in Boynton Beach, Fla. They formed the ACO with an expert in Medicare HMO risk projects. Each of the participating primary care physicians received about $150,000 from the Medicare Shared Savings Program.

“Primary care physicians have been handed a gift with the ACO,” Perez said. “It’s what they have asked for many years, to have control of their own patients.”

Perez credited the founders’ past managed-care experience and the ACOs’ commitment to delivering quality care with his organization’s success.

Challenges ahead

Calhoun reported that many of the smaller, physician-led ACOs tend to be undercapitalized. Many are on different electronic medical record platforms and not fully clinically integrated, such as reducing variability in practice patterns and clinical protocols and eliminating utilization rates. Meaningful relevant data can help convince outliers to change behavior, he said, but it’s hard. Calhoun said that he believes the blend of physician and hospital leadership tends to work best.

“If you are a physician-led ACO and not fully clinically integrated, you have a lot of head wind, and if you are under-capitalized, you are fragile,” Calhoun said. “Many ACOs fall into that category.”

Another challenge ACOs are facing is managing uncompensated care, particularly in states that have not expanded Medicaid, while disproportionate share payments drop.

Colla found the physician-led ACOs were less likely to include a hospital or a post-acute care organization, and said they may find it more difficult to track patients in those settings.

“Just because it’s not a hospital does not mean they don’t have substantial integration already,” Hickner-Cruz countered.

Moving forward, Colla said, ACOs face the challenge of having some patients in the ACO and others still in a fee-for-service reimbursement model.

“It’s hard to redesign your practice while you are still in the fee-for-service system,” Colla said. “Getting more payors to move to accountable care contracts will help providers make the transition.”

Colla reported many of the physician-led ACOs are participating in the Medicare ACO program from the Centers for Medicare & Medicaid Services (CMS) and are participating to try out payment reform.

“CMS designed the program to allow a lot of different provider groups to join the program,” Colla said. “Because there is so much diversity in the type of groups participating, we will see who will succeed.”

Beerman reported commercial insurers, including Aetna and Cigna, have developed ACO-type relationships with many physician groups.

“Physicians are in the thick of it and have more control,” she said.

However, Calhoun cautioned that many of these commercial contracts include a downside risk component.

“Our concern is that some of these physician-centric ACOs are vulnerable and risk being acquired by larger integrated networks in their markets,” Calhoun said.

Related articles:
More ACOS Join CMS Program
Providers Getting Creative with New Healthcare Delivery Models
Early ACO Adopters Share Their Successes and Challenges

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