The first one is a picture of our health care system – many disconnected or sort of connected pieces that work in a relatively chaotic manner to deliver care. This system is very hard to manage and by nature, is beset by some level of inefficiency. It is also, however, extremely dynamic and able to quickly add new technology, practice concepts, treatments, medicines, and evermore refined medical delivery.
The second picture is how the Affordable Care Act wishes our health care system could look – an organized, coherent, manageable monolith. This is kind of system that can more easily be managed from the top down, like the Army, a football team, or a single payer health care system. (Actually, the analogy falls apart with single payer; it’s just a way of saying that is what single payer adherents believe to be true.)
The Affordable Care Act of 2010 (ACA), the new federal health care law, in trying to create this coordinated, efficient, top-down health system model, points toward three large organizational structures to accomplish its goal: The Health Benefit Insurance Exchanges (one in each state), consolidation of health insurance companies (the eventual result), and Accountable Care Organizations (ACOs). Here I want to briefly address the ACOs, and will leave the others to another time.
Dr. Richard Reece, who has been writing about health care reform efforts for nearly 50 years, calls ACOs, “Another attempt to herd doctors into large organizations.” Other of my MD-friends call them “HMOs on steroids.” Or, “super-sized HMOs.”
The simple definition of an Accountable Care Organization is this: a broad system of doctors in a wide variety of practice types, along with hospitals, clinics, and other health care service providers. ACOs will deliver services under contract with the Centers for Medicare and Medicaid Services (CMS). ACOs will also contract with private insurance companies. CMS believes by bundling care into these super-sized HMOs, it will be able to accomplish several purposes, the most important of which is to reduce the cost of health care.
The “Accountable” part of the ACO is designed to use manufacturing quality control concepts to evaluate the performance of a doctor or hospital. If the doctor follows the prescribed guidelines (i.e., is accountable), the doctor will be rewarded with a bonus. If the doctor fails to follow the guidelines (never mind the uncooperative patient that refuses to obey the medical cookbook), the doctor receives no bonus – and might be paying to keep his or her job.
It’s essential to understand that the ACO on its own is not designed to reduce the use of health care, nor will it reduce overall spending. Its purpose is to reduce the unit cost of care.
Using the ACO to reduce the cost of care is something like thinking that if we could eliminate small bakeries and have all pastries made and distributed from one source that our donuts would cost less. We will probably buy as many donuts or even more, but each one would save us a nickel.
I believe that the purpose of the ACO is to make it more possible for the federal government to manage the health care of everyone who receives care from an ACO. And who might that be? Well eventually, you, me, and everyone.
What’s a doctor to do?
Right now, doctors all across the country are trying to decide what to do about these ACOs. Do they sell their practices and go to work for the hospital or mega-medical system that sits at the center of the ACO? Do they try to continue in private practice, or in small, independent group practice? A cash only practice might work, unless you are a cardiac surgeon.
More regularly now, the march is toward selling a private clinic or practice to join the ACO, as if it is a matter of fate. Many doctors believe it is a way to escape from the underpayments he or she receives whenever a Medicare or Medicaid patient enters their clinic.
(For the non-doctors reading this column, understand that more than 75 percent of doctors report that Medicare’s payments for their services barely meet the hard cost of providing the service, or in fact, the doctor loses money every time he or she sees a Medicare patient. But even at that, Medicaid is far worse. Doctors report receiving as little as 28 cents on the dollar for each Medicaid patient. Therefore, many doctors are refusing to see anymore Medicare and Medicaid patients.)
When the doctor contracts with the new ACO, he or she may have walked into a trap, and it might be one from which extracting oneself is nearly impossible. Here is why: Hospitals cannot turn away Medicare or Medicaid patients. When the doctor joins the ACO in concert with a hospital (and an ACO cannot exist without a hospital), the doctor has by default agreed to accept Medicare and Medicaid payments for service. So what was inadequate before is just as inadequate in the ACO, except the doctor has no recourse, other than to quit the ACO.
The others that join ACOs – nurse practitioners, physician assistants, perhaps pharmacies, medical device resellers, etc. – to flee the Medicare and Medicaid reimbursement system will find themselves at the financial mercy of the ACO. The ACO, in turn, will be subject to the reimbursements it can win from the remaining, huge, private health insurance companies and the granddaddy of them all, CMS.
This is all driven, in my humble, yet studied opinion, by the belief that large organizations are more manageable and efficient than are small organizations. More so, that solving the health care “crisis” means that the federal government must be in charge. Here is the greatest worry about all this. The federal government wants Accountable Care Organizations so government planners can hold someone accountable. But, who holds the government planners accountable?