Marc Bard, MD, chief innovation officer in the healthcare practice of Navigant Consulting, is the co-author of the recently published white paper, "Accountable Care Organizations and Payment Reform: Setting a Course for Success." Here, Dr. Bard discusses what ACOs mean for hospitals.
Q: What role do accountable care organizations play in healthcare reform?
Dr. Marc Bard: ACOs make up only a small portion of the reform law, way out of proportion to the interest and enthusiasm they have garnered from healthcare leaders. The law makes just 14 stipulations about ACOs. They have to bring together "groups of providers of services and suppliers meeting criteria specified by the [HHS] Secretary"; they have to be "willing to become accountable for the quality, cost and overall care of the Medicare fee-for-service beneficiaries assigned to it"; and they have to enter into a three-year agreement at minimum.
Q: Why have ACOs become so fascinating to hospital executives?
MB: Hospitals are thinking, "This structure could allow me to do something that I need to do anyway," which is to link payment to performance, rationalize the system and produce fundamentally better outcomes. ACOs are attractive to hospitals that are ambitious about the future as well as hospitals that aren’t sure they can make it under the current system and see ACOs as something that could save them. Hospitals have been trying to do work closely with physicians for years, but it always a struggle. ACOs offer a means to work more closely with physicians.
Q: Why is it hard for physicians and hospitals to mesh well?
MB: Physicians are very different from hospitals. The hospital is a managed enterprise, but doctors are autonomous. One doctor speaks for one doctor, so it's hard to agree on things like evidence-based guidelines. It's like the difference between a track team and a soccer team. The track team may lose the meet, but I'll be happy if I win my event. On a soccer team, each player is pulling for the whole team, because if it loses, they lose.
Q: Can ACOs turn physicians into team players?
MB: I believe doctors are at a tipping point when it comes to seeing themselves as team players. Doctors in the 55-65 age group will always be autonomous for the most part. The older doctors are the royalty, the heavy admitters. The young doctors, on the other hand, have lifestyle issues and would like to show their capabilities inside a system. They actually prefer working in a team. Then there is a silent majority of doctors who could go either way. The issue is whether hospital leadership is capable of reaching the younger generation and nudge all their physicians to the tipping point.
Q: How will ACOs function?
MB: The new way of delivering care is a partnership. The ACO is not so much a financial partnership; it's a shared delivery partnership in which everybody shares the same goals. You don’t have to be that integrated to begin this process. You don't have to be a Mayo or a Geisinger.
Q: The reform law commits government payors to ACOs, but will private payors recognize ACOs?
MB: Something like this is already happening in Massachusetts. Blue Cross Blue Shield of Massachusetts has introduced something called an alternative quality contract, paying contracting groups of physicians and hospitals to provide services for members. The ACO is a single-signature contract for a population of patients. Providers need to have a reasonable level of integration, not as much as an ACO would need to have.
Q: How can the new relationships among providers under ACOs comply with the antitrust, anti-kickback and Stark laws?
MB: Probably what is going to happen is that the Federal Trade Commission and other regulatory agencies will allow exception much as they did for clinical integration.
Learn more about Navigant Consulting.
Q: What role do accountable care organizations play in healthcare reform?
Dr. Marc Bard: ACOs make up only a small portion of the reform law, way out of proportion to the interest and enthusiasm they have garnered from healthcare leaders. The law makes just 14 stipulations about ACOs. They have to bring together "groups of providers of services and suppliers meeting criteria specified by the [HHS] Secretary"; they have to be "willing to become accountable for the quality, cost and overall care of the Medicare fee-for-service beneficiaries assigned to it"; and they have to enter into a three-year agreement at minimum.
Q: Why have ACOs become so fascinating to hospital executives?
MB: Hospitals are thinking, "This structure could allow me to do something that I need to do anyway," which is to link payment to performance, rationalize the system and produce fundamentally better outcomes. ACOs are attractive to hospitals that are ambitious about the future as well as hospitals that aren’t sure they can make it under the current system and see ACOs as something that could save them. Hospitals have been trying to do work closely with physicians for years, but it always a struggle. ACOs offer a means to work more closely with physicians.
Q: Why is it hard for physicians and hospitals to mesh well?
MB: Physicians are very different from hospitals. The hospital is a managed enterprise, but doctors are autonomous. One doctor speaks for one doctor, so it's hard to agree on things like evidence-based guidelines. It's like the difference between a track team and a soccer team. The track team may lose the meet, but I'll be happy if I win my event. On a soccer team, each player is pulling for the whole team, because if it loses, they lose.
Q: Can ACOs turn physicians into team players?
MB: I believe doctors are at a tipping point when it comes to seeing themselves as team players. Doctors in the 55-65 age group will always be autonomous for the most part. The older doctors are the royalty, the heavy admitters. The young doctors, on the other hand, have lifestyle issues and would like to show their capabilities inside a system. They actually prefer working in a team. Then there is a silent majority of doctors who could go either way. The issue is whether hospital leadership is capable of reaching the younger generation and nudge all their physicians to the tipping point.
Q: How will ACOs function?
MB: The new way of delivering care is a partnership. The ACO is not so much a financial partnership; it's a shared delivery partnership in which everybody shares the same goals. You don’t have to be that integrated to begin this process. You don't have to be a Mayo or a Geisinger.
Q: The reform law commits government payors to ACOs, but will private payors recognize ACOs?
MB: Something like this is already happening in Massachusetts. Blue Cross Blue Shield of Massachusetts has introduced something called an alternative quality contract, paying contracting groups of physicians and hospitals to provide services for members. The ACO is a single-signature contract for a population of patients. Providers need to have a reasonable level of integration, not as much as an ACO would need to have.
Q: How can the new relationships among providers under ACOs comply with the antitrust, anti-kickback and Stark laws?
MB: Probably what is going to happen is that the Federal Trade Commission and other regulatory agencies will allow exception much as they did for clinical integration.
Learn more about Navigant Consulting.