Since physicians have been called the fundamental driver of ACO success, hospitals are revisiting their relationships and alignment strategies. Here are five ways the hospital and physician relationship will evolve in the wake and preparation of ACOs.
1. A revised culture may mean the expiration of traditional bureaucracy. It may rarely make headlines, but a number of physician integration projects around the country end up failing, with historic bureaucracy hindering the development of successfully governed entities. Even though care delivery models are different in every market, there are commonalities in failing and successful integration projects that serve as best and worst practices.
Failing systems usually leave physicians reporting under the hospital president, limiting their voice and influence in how healthcare is delivered within hospital walls. A thriving integration model, however, will establish a separate entity for the physician practice, with physicians reporting to the leader of the medical group who then reports to the health system CEO. "Successful models have governance or written communication with penalties for noncompliance and awards for adherence," says Mr. Harbeck. "When we see that model, we know it works. But it's very rare."
2. Physician and hospital leaders need to have "crucial conversations" for ACOs to work. Thomas D. Gordon is the CEO of that type of "rare" albeit successful model at Cedars-Sinai Medical Delivery Network in Beverly Hills, Calif. The group, which was formed in 1985, now includes more than 830 physicians: 117 physicians originally from Medical Group of Beverly Hills, which Cedars-Sinai Medical Center purchased in 1985; a 17-physician hospitalist company; a 7-physician pre- and post-transplant cardiology group; and an IPA with more than 700 physicians.
Mr. Gordon attributes much of the medical group's success to his integrated and trusting relationship with the Thomas M. Priselac, CEO of Cedars-Sinai Medical Center. "I must give him a lot of credit. He's worked with me every step of the way when things weren't going right, whether financially or strategically," says Mr. Gordon. "People often think physicians and hospitals are shoes and socks, but they're not. They're essentially fighting for the same dollar. But we approached this as a health system. If you have the crucial conversations, you can make it work," he says.
3. Independent physicians will be able to form new affiliations with hospitals. Cedars-Sinai Medical Group is planning to reach out to independent physicians and incorporate them into ACO-aligned goals, such as population health management. "For some independent physicians in this community, population health may not be on their radar. But we're going to do our best to include them in everything we're doing in population health," says Mr. Gordon.
Healthcare providers may offer high-quality patient care, but relationships with physicians outside the hospital walls — such as outpatient clinics, palliative care, specialty services and home care services — are now major determinants in ACO success. Also, hospitals should not lose sight of an important ACO cornerstone: patient centered medical homes. "Payors are working directly with physicians or physician groups, registering them under key evidence-based medicine criteria, and many hospitals aren't participating in that process. As a result, the payor has the most ability to negotiate," says Mr. Harbeck. "This is a huge mistake." Mr. Harbeck recommends hospitals aggregate physicians and push for registration under these standards, renegotiating contracts based on that success.
4. Hospitals and physicians can strengthen ties through a variety of models. Although more hospitals are acquiring independent practices in order to become ACOs with employed physicians, hospitals and independent providers can still establish affiliations short of full-out acquisitions.
Co-management agreements are gaining popularity as alternatives to employment, with 51 percent of physicians interested in pursuing co-management in the next two years and 24 percent of physicians already aligned in this model, according to a PricewaterhouseCoopers survey. This agreement between hospitals and physicians is one way for both parties to share responsibility, manage the operations of a service line and develop clinical protocols. This type of affiliation carries great potential for incentives, with physicians being paid for administrative components of non-patient care, which will be plentiful during ACO formation.
Another popular approach is clinical integration, which is considered to be the interim model before ACOs. Participation is selective and physicians must opt to comply with set clinical protocols and outcome measures. Physicians individually contract to serve on committees, follow evidence-based guidelines and be involved in measuring outcomes or practice data. Providers participating in this type of model work across a continuum — the hospital, physicians, outpatient services and pharmacy, for instance, all work to manage chronic disease and coordinate care.
5. Physicians will have new leadership positions and opportunities. Physicians are responsible for the evidence-based care decisions that will determine an ACO's success. This shift from fee-for-service to a culture focused on quality and outcomes will require change in clinical patterns, and few people can change physician behavior more effectively than other physicians.
To increase engagement within the ACO at all levels, hospital leaders and administrators may want to designate more responsibility to physicians. Many experts have said the new model is fundamentally physician-led, but hospitals first have to lend physicians opportunities to lead rather than merely expecting them to take charge. ACOs have stressed need for physicians who can excel in standardization, developing clinical protocols and measuring outcomes, among other skills.
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