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Physician Alignment Poses Challenge for ACOs

John Commins, for HealthLeaders Media, July 12, 2011

Physician alignment and incentive challenges could prove to be a major hurdle for healthcare providers who want to take part in accountable care organizations.

Richard C. Johnston, MD, an internist with Dallas-based Medical Clinic of North Texas, says hospitals will find ACOs to be a tough sell for skeptical physicians.  "The main stumbling block in physician integration is alignment of incentives. That, and who controls the dollars. Who does CMS write the check to?" Johnston tells HealthLeaders Media

 "Since most of the savings in the ACO comes out of limiting hospitalizations and ER visits and readmissions, there is a natural conflict there. If hospitals start to have their reimbursement cuts and if their admissions fall it is going to be difficult to sustain their infrastructure. So, who gets the money and distributes it," he says. "If the hospital is getting the money I would think they would probably try to protect their profitability first and the physicians would be left out there."


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A recent survey of 882 hospital administrators and physicians by recruiters AMN Healthcare found that 42% said physician alignment was the most serious obstacle to forming an ACO, followed by a lack of capital (38%), a lack of integrated IT (31%) and a lack of evidence-based treatment protocol data (25%).

David A. Spahlinger, MD, a senior associate dean for clinical affairs at the University of Michigan Medical School, says he's not surprised that physician alignment is becoming a sticking point.

"Yes there are some capital investments you have to make for IT and there are staffing issues, but in the end it's really the alignment of the parts in how we are going to care for patients," he says.

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2 comments on "Physician Alignment Poses Challenge for ACOs"


Arun K.Potdar (7/13/2011 at 7:07 PM)
Hospital's business goals and ACO's goals are inversely proportionate and any amount of incentives given to the qualifying Hospitals will not match the loss of revenue from Government clients unless cost cutting is made to match lower levels which in turn will dictate slow growth of one of the major components of any organizational budgets and that is the labor cost. As the article correctly points out how the incentive money will be handled by the Hospital participating in ACO program and distribution of it between Hospital,the Physicians and other care givers will determine the smooth progress towards the goals set by the ACO. Already there is a visible and not so visible friction existing between three components mentioned above. Who deserves the credit for achievements keep the spoils and who to blame for failures and face cuts will be major issue and that too a contentious one. Physicians will have to be skeptic and vigilant before jumpping on the bandwagon. On the hospital side unless a strong contractual control is placed on the way physicians practice medicine it will be at loss to make them perform in a balanced manner which is not only patient-care-centric but also limiting their autonomy to treat patients as they would like to with keeping hyper inflation in medicine in mind. The Staff Model HMOs went through this exercise in seventies and eighties and results are well known they are just about vanished. To be successful, ACO management will have to be left to Physicians alone with strong mandates to do the right thing. Hospitals should get out of this business if they have to survive into next decades. Just the IT costs and tracking down clinical data, scrubbing and modeling for decision support will wipe out good portion of the incentive dollars earned.

kosos (7/12/2011 at 4:48 PM)
Yes, alignment is key! Clear strategies need to be set between physicians and payers to ensure that all goals of this new health care model can be achieved. In addition, this requires an alignment of payment incentives. Most payers have a unique pay-for-performance program and their own set of measures. This leaves an unclear message as to what to focus on. In Ignite magazine, there is an interesting article about other ACO issues that are plaguing physicians: http://bit.ly/opA1V0