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ACOs, HMOs in Drag?



December 1st, 2010

by Dr. Jesse Cole

altACO models offer nothing that other ASOs--alphabet soup organizations--have not offered in the past. HMOs, PPOs, MPOs and more have all been tried and if not failed, at least have never lived up to the hype.

There is no reason to believe ACOs will fare any better. But it's possible the ACO experiment will be more dangerous than its proponents care to admit.


Let's start with the assumption that healthcare is so fragmented and inefficient that putting people in a hospital-based ACO will reduce costs. Where's the evidence for that? Do most people actually need a complex, multiprovider team to deliver their healthcare?

The answer is no.

Throughout their lives, most people have fairly self limited acute problems, or chronic, medically managed problems which required limited interventions that can be performed in a physician's office. Private physician's offices are generally run in a cost effective manner because the physician is paying the bills.

The critic will say the physician is over-ordering examinations to pay the bills. How? Most primary care physicians have fairly limited in-office ancillary income, generally basic lab, EKG, pulmonary function tests, and perhaps X-ray. These procedures generate an income, generally enough to pay for themselves but not enough for the physician to retire on.

"Ah ha," cries the critic. "You, Dr. Primary Care, don't really have enough in office resources to provide high quality coordinated care. I see no educators, pharmacists, social workers, physical therapists, specialists, subspecialists, billing coordinators or dieticians. That's costing the health care system money."

Or, according to the experts...a primary care practice is too small to provide high quality, cost efficient coordinated care because it lacks all of these elements.

Therein lies the problem. The ACO model depends upon the assumption that all health care delivered by primary care physicians in their office is cost inefficient and of lower quality than what an ACO will provide, without the necessary evidence.

Could the care provided by private physician practices be improved? Certainly. But where is the evidence that the fee for service, private physician model of health care is not efficient and does not provide good care? The ACO model is still fee-for-service. It's just that the fee will go to a larger organization, composed of many more people, all fighting for a piece of that dollar and creating costly overhead.

Do people with the vast majority of medical problems, such as acute upper respiratory infections, urinary tract infections, hypertension, and diabetes. Do they really need a multidisciplinary task force to take care of them? Such is the nature of an ACO.

Hospitals have certainly jumped on the bandwagon for ACOs, with good reason from their point of view. Hospitals are an anachronism when it comes to providing cost effective care. That's not a bug. That's a feature. Hospitals are supposed to be for people who cannot be managed as outpatients.

In fact, the irony is that outpatient medical care, largely delivered by outpatient physicians in private practice, has advanced to the point where hospitals have seen their occupancy rates plummet. Few remember the days in the 1950s and 1960s when those who survived heart attacks might spend several weeks recuperating in the hospital.

Hospitals now employ more than 50 percent of physicians, and that number is expected to grow. Among reasons cited, the new generation of doctor is more interested in lifestyle and security rather than the stress of private practice. But in accepting employment offers from hospitals, are doctors trading one set of stresses for another? I believe so, especially if the ACO model is widely adopted.

Dr. Jesse Cole is a radiologist in private practice in Butte, Montana. He is also subspecialty certified in neuroradiology, and vascular and interventional radiology and practices at Big Sky Diagnostic Imaging in Butte with a limited practice at Community Hospital in Anaconda. Tags: ,,

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