True physician leadership key to sustainability of ACOs
As we look toward a new year, the ongoing accountable care experiment under the Patient Protection and Affordable Care Act still has some critical unanswered questions:
How is it faring and what are the prospects for its future? Is this component of reform going to be a sustainable solution that will improve quality of care, efficiency and cost-effectiveness?
To date, results from Medicare and commercial accountable care organizations—while not without challenges and disappointments—are encouraging, particularly around their success in achieving superior quality outcomes. But for the organizations to realize their full promise, at least two key changes will be necessary.
The first is illustrated by a question I received from a media outlet several weeks ago. The reporter was seeking a perspective on the reluctance of some physicians to accept the fees various health plans charged through the health insurance exchanges. I pointed out that even among the most efficient practices, the cost of delivering care must be adequately funded. When payments are too low for physicians to deliver quality care and keep their practices viable, there is no good solution.
This problem is compounded by the fee-for-service payment methodology. While ACOs might receive payment on a prepaid basis, the physicians and hospitals inside the ACO are often still reimbursed based on volume. As a result, providers often don’t have an incentive to work together to find more effective ways to deliver clinical care. And when patients seek care outside of the ACO, physicians are at financial risk for care that may be unnecessary or inappropriate. In contrast, when patients are seen by physicians inside the ACO, particularly when they are part of a multispecialty medical group that shares a comprehensive electronic health record, the best quality care can be provided in the most affordable ways.
The second area where change is needed is the structure of many recently formed ACOs. The ACA prescribes some key characteristics of the ACO structure and, based on the law, the CMS has developed multiple “tracks” that require ACOs to move toward accepting financial risk. Well-capitalized hospitals and insurers, therefore, are in a better financial position than smaller physician groups to take the risk. This is why, as I noted in a recent Harvard Business Review commentary, hospitals in many newly formed ACOs have tended to be the leaders, with physicians in secondary roles as chief medical officers. Even in this type of foundation model, where theoretically control is shared, physicians often feel relatively powerless and struggle to commit fully to the goals of performance improvement and cost containment. For this reason, the foundation model is flawed.
There is an alternative: the partnership model, which relies on shared leadership among hospitals, insurance plans and medical groups. This leader- ship structure improves collaboration among physicians, produces higher performance and overcomes the tendency of doctors to try to maximize their individual compensation. In this model, the medical group works with, not for, the hospital or health plan and shares in the rewards or penalties. Although the partnership model has not yet been tried at the new ACOs, it has allowed a variety of established multispecialty medical groups—such as those in my organization, the Council of Accountable Physician Practices (including the Mayo Clinic, Kaiser Permanente, Intermountain Healthcare and Geisinger Health System)—to achieve superior quality outcomes, provide outstanding service and increase affordability.
Research published in journals such as Health Affairs shows that physicians are beginning to take leadership roles in many ACOs, and where this is occurring the organizations are achieving excellent outcomes. But real physician leadership means more than being a CMO reporting to a hospital administrator. It means that physicians are key decisionmakers in setting strategy, managing finances and pursuing quality patientcare outcomes. To fulfill the promise of ACOs, hospitals and health plans need to understand the value of true physician leadership.
Are ACOs sustainable? Only if we learn from the experience of the current ACOs and create new models for the future in which physicians feel committed to providing true accountable care to individuals and populations of patients.
Dr. Robert Pearl is chairman of the Council of Accountable Physician Practices, an affiliate of the American Medical Group Association; CEO of the Permanente Medical Group, Oakland, Calif.; and president and CEO of the Mid-Atlantic Permanente Medical Group, Rockville, Md.