Many hospitals are currently rushing to develop accountable care organizations, but physician involvement in the development and initial structuring of many of these networks has been minimal, says Mark F. Weiss, JD, a healthcare attorney with Advisory Law Group in Los Angeles, who generally represents physicians and physician groups. Looking back at the history of healthcare networks, a lack of physician involvement and engagement has typically led to failure. Thus, it is critical that ACOs involve physicians in their development efforts if they wish to be successful.
Problems with hospital control of ACOs
In the late 1980s, physician hospital organizations, PHOs, were developed so hospitals could ultimately gain greater control over the stream of physician referrals. Although today’s notion of ACOs extends beyond integration for referrals alone, inherent in the hospital-led ACO model is the idea that physicians refer patients to facilities within the ACO, thereby establishing a business relationship between the hospital and the providers. Under this model, hospitals also control the distribution of payment.
Physicians are tied to the hospital, and even more so than in the PHO model, the hospital wants to be in control of healthcare dollars, says Mr. Weiss. “Money comes into the ACO entity and it can decide how to disperse the money. From the physician perspective, that’s really hard to swallow,” he says. “They give up money and control, becoming de facto employees. That’s a bad place to be.”
Why physicians aren’t more involved in ACOs
Although physicians are a natural fit to run ACOs due to their role in healthcare decision making, many markets consist of physicians that are too fractured to partner together on such an effort. Additionally, physicians are so focused on patient care that they tend not to be aware of the importance of devoting time and effort to developing or defining their role in these causes, says Mr. Weiss.
“Hospitals have an infrastructure to make management decisions and carry them out, while physician practices tend to be smaller and tend not to have the same business focus,” he says. Mr. Weiss emphasizes that from within their own independent practices physicians are able to negotiate with entities like Blue Cross Blue Shield or other insurance carriers and decide whether or not to accept their terms. If the physician joins a hospital-led ACO, the physician will lose some control over how much money he or she will get from insurers. The physician may end up with no choice in the matter. “Think about how much power that payor will have over determining the physicians’ financial future. It becomes a much bigger issue. The hospitals are just salivating at the thought of these physicians being uninformed and naively falling into a situation,” he says.
Physician involvement from the start
The key to a successful ACO is in the structure that gets set up when the ACO is being developed. Hospitals must engage physicians early on to ensure they are not seen as taking control away from the physicians. “Physicians should give their input and try to gain control when the ACO is being set up. They need to be involved in the medical decision making and the financial and business decision making of the ACO,” he says. Hospitals need to pause and take the time to collaborate with the physicians coming into their organization. If ACOs are going to succeed over the failures of the past they must be put together differently from the very beginning. It’s not just another contract being signed; it’s a new network being created.