Friday, December 3, 2010

The Health Care Cold War: Will ACO's Bring Down The Wall?

Although there are no sounds of B-52's flying at low altitudes above the hospital, there are salvos nonetheless between the partners in health care as the positioning of providers in the ACO marketplace starts to crystallize.

ACO's, or accountable care organizations, are the product of one of the Obamacare beta solutions for controlling health care costs and improving outcomes.

My friend Dan Finch at the Texas Medical Association compared them to unicorns: no one's ever seen one but you'll recognize it when you do.

I'm not sure he's completely correct, there are a few of these organizations forming around the country. One in Chicago offers to produce great data on the utility of the delivery mechanism though the jury is still out on whether it will net positive results for patients.

These new entities can be formed really by anyone -- that is, anyone brave enough to pioneer the business model. The risks are great because of the capital requirements to protect the integrity of the captitated payment system which is really the heart of the organization.

Capitation is an ugly word in health care financing probably because of the almost unanimous negative consequences of the insurance models funded in this manner in the 90's.

Everyone then left with a bad taste in their mouth.

Insurance companies couldn't rein in physicians and hospitals to control costs and patients never bought into the model that prevented them from using a infinite amount of resources in their own health care.

So why would it be different now?

The argument is mostly supported not by the change in patient expectations or the robust IT infrastructure that we have in this century, but rather by the necessity to control costs. That argument unfortunately will drive the business principles that formulate these new organizations.

The definition of a "cold war" must include the word "protectionism." Certainly the world saw the escalation in missile batteries and nuclear warheads until Reagan was successful in "tearing down that wall."

But, pardon the reckless use of the 1988-presidential-debate line: Mr. Obama you are no Reagan.

Why am I so pessimistic these ACO's will find a place in this market space?

First is the lack of a unified national standard concerning our information technology infrastructure. There is currently no data sharing among providers outside of their own controlled groups (you can thank another federal stature for the difficulty here: read HIPPA).

And although a standard can be created and implemented, there is still the fact that many of the ground war health care practitioners (the primary care physicians) are still not active users of this technology. Current estimates put this at somewhere around 30% tops.

And with the cost of implementation of an electronic health record setup in a physician's office near $40K it will be some time before we see widespread adoption of EMR's.

Then there is the issue of exactly what we will measure to insure that quality care is being delivered. These so called "measures" of quality are still undergoing national debate and peer review. They're close to getting the numbers right. The question is whether physicians and patients will buy in.

And finally there is the nasty issue of "gain sharing." This is where you reward the parties for achieving the goals of delivering high quality care in an efficient manner.

Paying physicians is particularly difficult because of a myriad of other federal statues relating to anti-trust and kick back regulations.

Some groups, particularly hospitals, believe that the answer to this issue is direct employment of physicians. But this business model is challenging in that not only must a hospital control the diverse interests of a multi-specialty group of physicians, but it also has to morph the health care of individual patients to fit a cost savings model.

Both of these groups are not historically responsive to direction by a third party.

Then you have the difficult problem that hospitals are funded by actually admitting patients and providing care. In the ACO model the profits only come from keeping patient's healthy and OUT OF THE HOSPITAL.

Now sure, business models can change. But hospitals will have to recognize and be able to adapt to this change in a swift and controlled manner to insure that they remain profitable and can continue their mission.

Oh lest I forget one other very important party to the ACO equation: the people who pay for health care services.

Whether these ACO's are created as a hospital-based entity or along the traditional insurance model, at the end of the day both the government and American business expect to pay less for health care services in the future.

So for the ACO model to be successful it actually has to have a declining net revenue line.

It is this money line that has everyone so concerned and lining up to protect their own interests.

Hospitals are arguing for a hospital-centric model so they can control the dollar at the end of the day. Physicians are either jumping on board with the hospital groups or they are lobbying for measures to protect their private practice.

Patient groups are seeing that there could be limitations on both who they can see for care and where they can go. This loss of autonomy in the doctor-patient relationship will be very hard for most patients to swallow.

Insurance companies and business groups don't trust hospitals, physicians, or patients to work to control costs in the health care economy. So they are lobbying for strong protective measures to insure that ACO's don't get out of the normal reserve requirements to sell an insurance product.

ACO's hold the promise of ending the cold war.

If all of the parties could work together on a fair and balanced model that puts the patient first in the decision making process, it could offer an opportunity for success.

But for now all of the parties are building up their arms to protect their own interests, or they are being overwhelmed by a well funded adversary.

Virtually every hospital is "creating an ACO" and physician's practices are being gobbled up health care systems.

I applaud the idea of collaboration and use of IT to improve the health experience for patients. Today, though, I'm not too confident that the current attempt at tearing down the wall will work.

- Posted using BlogPress from my iPad

Location:Quito, Ecuador

No comments:

Post a Comment