Physicians Lead Most, Best ACOs

The transition to value-based healthcare requires strong physician leaders. Physician engagement is the most critical factor for ACO success. But financing and working across the care continuum are challenges for physician-led ACOs.

An accountable care organization (ACO) in Palm Springs, FL, could very well be a model for designing a successful physician-led ACO. This format accounts for a more than half of the ACOs operating now, according to survey results published this month in Health Affairs.

Palm Beach ACO, one of the first to be part of the CMS Medicare Shared Savings Program, was one of 29 ACOs that generated enough savings to merit a bonus payment. It received an $11 million bonus for generating $22 million in Medicare savings. Like most of the other MSSP ACOs that received a bonus payment, Palm Beach ACO is led by physicians. It's also owned and operated by physicians, a characteristic that the Health Affairs article points out is increasingly common.

Study shows most ACOs run by docs
The study authors, who are primarily affiliated with the Dartmouth Institute for Health Policy and Clinical Practice, surveyed 173 ACOs, including those established through CMS, Medicaid, or commercial payers, and found that 51% of respondents self-identified as being led by physicians. Thirty-three percent indicated leadership was jointly held by physicians and hospitals. Just 3% said they were hospital-led only; 13% said they were led by another entity. In addition, the survey noted that physicians held the majority of board positions across various ACO types, whether physician or hospital-led.

The study also identified common characteristics of physician-led ACOs:

• Most are participating in MSSP, not the Pioneer ACO program
• They are less likely to include a hospital, federally qualified health center, or rural clinic
• They are less likely to provide emergency and post-acute care services

David Muhlestein, director of research for Leavitt Partners and co-author of a recent white paper, A Taxonomy of Accountable Care Organizations: Different Approaches to Achieve the Triple Aim, says the physician-led ACO model doesn't mean that hospitals can't also be successful. He points to the hospital-led ACOs that are part of the CMS Pioneer ACO program.

"From the Pioneer [ACOs}, where they saved money was by moving patients to a lower-acuity setting," says Muhlestein. "They have a strong primary care component … and can drive change from the outpatient side."

But hospital-led ACOs face a more difficult task because they can't sacrifice inpatient revenue, so the component of care hospitals have to change is on the outpatient side, Muhlestein points out.

In contrast, physicians already are front-and-center with outpatients, which may be one reason physician-led ACOs are growing in number and may be better at capturing savings, says Ellis "Mac" Knight, MD, senior vice president and chief medical officer for Coker Group, a healthcare consulting firm.

"Physicians are closer to the frontlines of care delivery," Knight told me. "Physician engagement is the most critical factor in any ACO, and when physicians are running the show, it cuts down on the layers of bureaucracy that can bog down ACO operations."

Knight says an ideally structured ACO is a clinically integrated partnership that includes physicians and hospitals. He notes that hospitals have the capital to fund the significant costs an ACO requires, both at startup and for maintenance. The Dartmouth Institute study mirrors Knight's outlook, noting finances as one of the challenges that physician-led ACOs face in the future, despite some early success.

Another challenge that physician-led ACOs face is managing patients across the continuum of care. ACOs being run by doctors are less likely to include all the services—acute-care, behavioral, and pharmacy—a complex patient may need. Without these potentially key healthcare components, the gaps could exist for medication compliance and/or referrals, the Dartmouth Institute study says.

With physicians and physician groups increasing their participation in ACO models, they are extending their reach into partnerships with other care providers and payers. Strong leadership skills will be essential to navigating those relationships.