I believe this is a
fantasy of healthcare policy wonks working for the Obama administration.
Many physician groups
and hospital systems believe they will lose money taking on these risks. These
are the groups that are holding back and not forming ACOs.
Nevertheless on January 1st CMS proudly announced that
it has nearly doubled the number of ACO programs in the country by adding 106
new ACOs to the existing 148 programs for a total of 254 programs to date.
“An insurer, or insurance carrier, is a company selling the
insurance; the insured, or policyholder, is the person or entity buying the
insurance policy. The amount to be charged for a certain amount of insurance
coverage is called the premium.
Risk management is far
from an exact science. Risk management depends on a large number of people
paying premiums who are not at risk for disease.
Obamacare’s goal is to
have all the low risk consumers pay for the higher risk consumers.
However, President Obama
has provided low risk consumers an out. The penalty for not participating is
modest compare to the cost of the insurance. If a low risk consumer gets sick
he can immediately join the health insurance exchange program without
The increased cost of
illness is compounded when a large number of patients have chronic diseases.
A contributing factor to
developing chronic disease is obesity.
America has a national
Patients with Diabetes
Mellitus are vulnerable to multiple diseases such as hypertension,
hyperlipidemia, kidney disease, eye disease and vascular disease.
Each might be at a
different stage of progression. The risk for costly complications is different
for each at each stage of disease progression.
The diabetic might or
might not adhere to the treatment regime outlined. It is difficult to risk
weight these patients. It is risky to take the responsibility for the medical
care outcomes for these patients.
In reality the principle
risk managers are consumers.
experts have not practiced medicine. They either do not understand these risks
or they want to place the risk with physicians and hospital systems and provide
Many medical outcomes are
dependent on patient responsibility for managing their own risk. Patients must
participate in their own care to receive maximum benefit and the best medical outcomes.
do not empower consumers to be responsible for their own medical care.
Healthcare should be consumer driven with consumers controlling their healthcare
dollars. They will then make informed choices about their care and insurance
2. ACOs create artificial
incentives to improve quality medical care and provider performance.
3. Consumer driven healthcare creates real
incentives to promote price competition by physicians and hospital systems. True
competitors will constantly work to improve their products, attract
consumers, and ultimately increase market share.
In a systems of ACOs consumers do
not play a role in stimulating completion. Consumers are passive recipients of
treatment from an assigned ACO.
4. Most physicians are reluctant
to assume accountability for patient outcomes. Physicians recognize that
most medical outcomes are directly under consumers behavioral control.
5. ACOs structure does not include consumers’
incentive to be responsible or accountable for their own medical care.
ACOs undermine any attempt to create a truly
accountable healthcare system that can drive down medical costs.
6. ACOs do not encourage provider
accountability. ACO’s shared savings incentive
does not seem to be adequate for the risk assumption.
Providers will continue to
be paid for each service they perform until the government provided
funds run out for that ACO.
7. There are also grave uncertainties and
practical complications of distributing government funds and savings if any
between the hospital system and physicians on the hospital systems staff.
8. ACOs create an
unfair competitive advantage for large organizations that are hospital system centric.
Eligibility requirements are vague and ambiguous. The eligibility
requirements suggest that larger organizations have an unspoken
9. This is the reason
hospital systems are trying to form ACOs. Hospital systems think they will make
money. I believe hospital systems will lose money. The government will have to
supplement payment for hospital systems to stay afloat.
10. When hospital systems lose
money they will fight with their staff physicians over the distribution of
The cost of hospital services will then
skyrocket further. Consumers will be the losers.
11. Groups of independent
practitioners as well as other types of small and mid-sized practices may
lack the infrastructure, information technology facilities, or other resources
needed to qualify for ACO eligibility.
12. They will be forced to join hospital systems.
Hospital systems have a long history of taking advantage of physicians
skills and intellectual property.
Tension between hospital systems and staff
physicians will be created. Hospital systems’ ACOs will crumble. The cost of
medical care will continue to increase further.
These are just a few of the reasons ACO’s will fail.
No matter how hard CMS tries to change the narrative
these are some of the reasons explaining the lack of hospital and physician participation
to this point.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.