"Accountable care organizations have been described as unicorns, because none have been seen but everyone knows how to describe one." So says MGMA independent consultant Owen Dahl. Because we haven't yet seen any ACOs in action, many practices have put off thinking about them. But ACOs are emerging, in more than just theoretical form, and understanding market changes just makes good business sense.
Should you get involved with an ACO? The answer depends on your practice's strategy, culture, and tolerance for risk.
An ACO is an organization of healthcare providers that can receive additional funds from Medicare (and an increasing number of private payers) if it can demonstrate that it provides higher-quality care at reduced costs to a defined group of patients. An ACO must measure quality, outcomes, patient satisfaction, and cost, for which it will need a sophisticated IT infrastructure, and it must form a legal organization to receive and distribute shared savings among its providers.
The regulations governing Medicare's new Shared Savings Program have formed the framework around which ACOs will organize. To participate in that program, an ACO must:
• Define processes to promote care quality, report on costs, and coordinate care.
• Develop a management and leadership structure for decision making.
• Develop a formal legal structure that allows the organization to receive/distribute bonuses to participating providers.
• Include the primary-care physicians (PCPs) of at least 5,000 Medicare beneficiaries.
• Provide CMS with a list of participating PCPs and specialists.
• Have contracts in place with a core group of specialist physicians.
• Participate for a minimum of three years.
ACOs will be led, for the most part, by hospitals and regional health-delivery systems, since only such large organizations have the scale necessary to meet the government's regulations, which are centered on managing the healthcare outcomes of large populations. But ACOs are going to need affiliated community clinics to deliver many actual services to patients, so practices will have an opportunity to join ACOs.
Hospitals that are forming ACOs might offer to purchase your practice outright, or may propose (or be open to) some lesser form of formal affiliation. Such offers might be attractive, as declining reimbursement and increasing practice expenses have driven many physicians in recent years to consider paths that include hospital employment, hospital integration, and various other professional service arrangements.
When affiliating with a hospital, you want to reduce the headaches of practice management, increase your access to capital, mitigate the risks of an uncertain future, and improve your income potential. But the flip side to all that is a loss of control. Entrepreneurial private-practice physicians tend to underestimate what it will mean to have the hospital as their "boss." Before making any decisions about affiliating with a hospital, consider the nature of your current relationship with its administration. Bear in mind that a new kind of affiliation might bring with it additional bureaucracy and make it harder to do what you want to do. But it might bring benefits, too, like income stability and resources for new technologies.
How'd we get here?
The trends shaping healthcare today are consumerism and patient-centered care; transparency in healthcare cost-effectiveness; value, as represented by quality and safety in relation to cost; metrics; and information technology that delivers real-time data on the patient, processes, and systems.