Accountable care organizations: How will they affect your practice?

April 1, 2011

Across the country, the author has been hearing ob/gyns discuss selling their practices to, or merging them with, a hospital or academic medical center and/or joining an accountable care organization.

Across the country I hear ob/gyns talking about selling their practices to, or merging them with, a hospital or academic medical center and/or joining an accountable care organization (ACO). There is anxiety afoot about being left behind during what appears to be the rapid industrialization of the United States' healthcare delivery system.

For me, all this talk has a dizzying déjàu quality. I am vividly reminded of the mid-1990s and the many hours I wasted helping to form an Independent Practice Association and a Physician-Hospital Organization. At the time these entities were seemingly created overnight from whole cloth to meet an expected onslaught of capitated contracts from managed care companies that never materialized.

As in the 1990s, this current round of healthcare delivery transformation has again been precipitated by government efforts at healthcare reform. In the present case, the Patient Protection and Affordable Care Act authorized the secretary of Health and Human Services (HHS) to create the Medicare Shared Savings Program to facilitate Medicare contracts with ACOs by January 1, 2012. The goals of the program are to promote accountability for a given patient population and coordinate items and services under Medicare parts A and B, as well as to encourage investment in infrastructure and redesigned care processes to achieve high quality and efficient services.1 The exact statutory requirements for establishing an ACO currently are being rolled out, but in essence, an ACO:

For the government, value-based payments could finally break the escalating spiral of healthcare inflation, which largely has been driven by FFS payments. For physicians, ACOs hold the promise of allowing more time with patients because volume of service would no longer be incentivized. It also could reduce micromanagement and paperwork, at least for Medicare beneficiaries. Moreover, if value-based payments become the primary payment mode among commercial payers, it could permit an evolution from our current fragmented, uncoordinated healthcare delivery system with its focus on procedures and visit volume to a system that emphasizes coordination of care, better long-term health outcomes, safer care, and more satisfied patients. It also would allow for true cost reduction through reallocation of spending among types of services that maximize value, elimination of non-value-added services, optimization of economies of scale in healthcare delivery, and reducing cycle time in care delivery (eg, admission to percutaneous angioplasty times).2 Ironically, all these cost savings strategies would also improve outcomes and reduce complications and errors.