ACOs: It’s All About the Doctor

September 14, 2011 - In the months since CMS released its proposed accountable care organization (ACO) regulations, a growing chorus of policy makers, health association leaders and others have shared their views on why ACOs won’t work – or at least why they will be problematic as currently conceived.

Some see the concept as too financially risky. The American Hospital Association recently released a study estimating ACO start-up costs in the $11.6 million to $26 million range. Others foresee anti-trust laws as being an obstacle, or are dubious about the many quality measures that must be reported, or the complex IT requirements.

Perhaps the most prevalent concern, however, is over physician staffing and alignment. AMN Healthcare recently conducted a survey of hospital and medical group administrators regarding ACOs that underscores this point (see response to one survey question below):

If Your Facility Is Moving Toward Forming An ACO, Do Any of the Following Pose Serious Obstacles to Your Efforts?

Physician staffing/alignment…….42.3%
Lack of capital……………………………38.1%
Lack of information technology..31.5%
Lack of evidence-based protocols….24.5%

As the survey suggests, the key challenge in forming ACOs, and in reforming healthcare in general, revolves around physician staffing and physician behaviors. Despite advances in medical technology and the many and growing contributions of nurses, allied professionals and other clinicians, physicians remain the “quarterbacks” of the delivery team. They are the ones who diagnose, admit and discharge patients, they are the ones who order tests and perform procedures, and they are the ones who craft treatment plans. Without their participation and cooperation, the march from volume to value, which is what ACOs (and health reform in general) are all about, will go nowhere.

Forming ACOs will therefore require physician availability. In an era of doctor shortages, all types of physicians will be required to implement the patient-centered delivery systems of tomorrow, including full-time physicians, part-time, employed, independent, U.S.-trained, internationally-trained, remote and locum tenens physicians. Hospitals and medical groups will need to find a way to bring an increasingly heterogeneous physician workforce into the staffing mix.

ACOs also will require physician compatibility. Doctors will need to be compatible with a system that rewards them for achieving quality and cost goals – as will hospitals and medical groups. This is where ACOs, with their elaborate, Rube Goldberg-like structure1, are most likely to break down. To achieve the desired behaviors will require a physician compensation structure that is not dependent on traditional volume based metrics, such as number of patients’ seen, net collections or relative value units (RVUs). During the last serious effort at health reform in the 1990s, managed care foundered largely over the inability of hospitals, physicians, and medical groups to find a workable substitute for volume-based physician compensation.

It may be different this time around, but a dramatic cultural shift will be needed. Capital, information technology, treatment protocols, and other obstacles can be worked out, if physicians can practice in a way, and lead their “teams” in a way, that improves care, reduces cost, and yet pays them fairly for their effort and expertise.

And that’s one big "if."

Tim Boes is president of Staff Care, the leading temporary physician staffing firm in the United States and a company of AMN Healthcare.

1A Rube Goldberg machine or device is a deliberately over-engineered machine that completes a basic task in a complicated manner, typically creating a chain reaction. The expression was coined after cartoonist and inventor Rube Goldberg (1883-1970).