Hanging this nation’s cost cutting/quality enhancing hopes on Accountable Care Organizations (ACOs) is bound to be frustrating and disappointing.  The ACO model seriously lacks sufficient real world grounding and is no magic pill.  Things like resources, operational capability and alignment (of financial incentives and direction) seem to have been overlooked or undervalued.

The ACO model is based on one fundamental assumption:  an expanded role of primary care physicians can slow cost increases and ensure better coordination of care.  That assumption is flawed for two reasons:  first, there is a large and growing primary care shortage; and second, the financial incentives in healthcare have driven a system based on acute, episodic interactions, leading to enormously fragmented clinical training and care.

We not only have inadequate resources to drive change away from acute, fee for services based care, but rather we lack resources that drive wellness. As one physician with a large hospital system recently said:  “We physicians are not trained to provide healthcare.  We’re trained to intervene when things go bad.”  Asking healthcare professionals and facilities to drive a model based on outcomes and resource consumption is theoretically possible, but a remarkable leap of faith (and training) is required, given they have made their livings off of sick people for so long.  That’s not to say that changing financial incentives from acuity to wellness and outcomes won’t work.  It’s just going to require training and proof that the players can make money with the new mandates.

As far as operations go, those with the greatest access to management, capital, IT and such are also the most expensive—hospitals.  It makes sense that the core objective of healthcare reform is to “squeeze the toothpaste tube” backwards from hospital to specialist to primary care physicians, but it’s a great leap of faith to expect that hospitals will or even can control costs.  In a healthcare system where providers admittedly are rewarded for doing more with more expensive things, the sharp turn required by the new law will require more than just a new law.  With all the current hospital-driven physician acquisitions, the increasing role of hospitals on the ACO issue looks at times more like turf guarding than any real cost-saving, quality enhancing move.

At the end of the day, all players have to answer the question “Did they reduce cost and enhance quality?”  It seems convincing that moving away from the fee for service model will change behavior.  We just need to make sure (1) there are sufficient resources to implement the change, and (2) financial and clinical issues are well balanced.  Time will tell, but meanwhile the current irony is that the most expensive link in the chain is best situated to actually operationalize the ACO concept.

Alignment is critical.  Financial alignment will require the players to believe they can all thrive in the new ACO model, yet physicians are historically leery of any hospital driven system.  In fact, given that hospitals are driving the ACO bus at the moment, the biggest fear among physicians is that they will be left out.  Even among physician-driven ACOs, the tension between primary care physicians and specialists is intense.  How much of any savings will go to primaries vs. specialists is no less divisive than the issue of the hospital/physician split of the shared savings.

Even more critical is the apparent lack of consideration given to the need for patient participation.  Where is the financial incentive for healthy patient choices and the disincentive for unhealthy patient choices?  Moreover, in a culture where more is more, why would anyone want to receive care from an organization that gets more by giving less?  Given further the ability of patients to wander in and out of ACOs and yet charge their ACO with the costs of non-ACO providers (who arguably have no stake at all in reducing expenses), the forecast for patient alignment is gloomy, but their buy in is critical.  It is difficult to see where patients have any stake in this change and would even be inclined to choose to be served by an ACO.  Many noted theorists have drilled on the glaring lack of patient alignment.  Rama Juturu and recent Wall Street Journal editorialists/economist Clayton Christensen have been outspoken about the need to enlist patients in the drive from intervention to prevention.  Patients that flock to ACOs (or whatever) will only do so if they see what’s in it for them.  The only thing an ACO can sell is results, outcomes.  And that’s gonna take time to measure and to sell.

At the end of the day, the threat of ACOs (and any vehicle to control healthcare costs more effectively) isn’t that they won’t work.  It’s that cost concerns will outstrip clinical ones.  While it can be argued that the employment of physicians by traditionally adverse players (like hospitals) will likely reduce the tension between them, it is precisely that tension that has always held the threat of “money over quality” at bay.  What will happen as hospitals and other healthcare players employ more and more physicians?  One can only hope that it is not silence and that, as found in some well established systems in the Midwest and West, respect for the different and necessary roles of ensuring both quality and economic survival will balance out, regardless of the healthcare delivery model that emerges.