Weighing the Dollars and Sense of ACOs

If Accountable Care Organizations (ACOs) are to become the next great thing in health care, somebody had better alert physicians.

A recent survey by LocumTenens.com, a physician staffing firm, found that only 60% of physicians are willing to participate in an ACO arrangement, with 40% still unwilling.

However, Phil Dalton, president and chief executive officer of MDS Consulting, a national health care consulting firm, says he is surprised the “willingness” percentages are even as high as they are.

“I’m even surprised that 60% know what the term ACO is and how it applies,” says Dalton, adding that he thought the unwilling percentage would be upwards of 80%.

Been there, done that

Dalton says that when he speaks with physicians about ACOs, the first hurdle he has to overcome is one of misunderstanding. Physician comments usually include the following:

“We did that before.”

“We tried capitation.”

“We were part of an integrated delivery system, and it didn’t work.”

Tom Ferkovic, managing director of Akron-Ohio-based SS+G Healthcare, understands physician reaction.

“Anyone who was practicing 10 or 15 years ago has gone through this once before,” he explains. “They’re very skeptical — not of the ACO concept, but they want someone to explain to them how they’re going to make it work this time. How is the money going to flow?”

Show me the money

Ferkovic recalls the time of the Great Depression in the U.S., when many people lost all their money and decided never again to trust the banking system. With ACOs, physicians don’t think they’re a bad idea — they just want to see some “meat on the bones” before signing on.

“It depends how you’re asking the question,” Ferkovic says. “If the question was asked are we supporting the concept and that we have to change the current model, I guarantee that [60%] is low number. If you’re asking the question ‘are you ready to sign on for an ACO?’ I’m shocked that it’s that high. Because most are asking, how does it affect me tomorrow?”

Dalton says the problem is two-fold. Physicians don’t understand the potential financial impact from an ACO arrangement, and it’s still too early to point to any significant financial returns that some of the pioneer ACOs have achieved.

“Everyone looks back to some of the failures of capitation and risk-bearing types of relationships, and they think twice about entering into those types of agreements,” he says. “There’s uncertainty, confusion, and [the ACO concept] still has to be proven out.”

Receptive, but cautious

Ferkovic says that times are indeed changing in the health care profession. Years ago, if doctors were placed side by side against key information and data, the comparison had to be blinded.

“God forbid that everybody would know who’s at the top of the chart and who’s at the bottom of the bell curve,” he explains. “You wouldn’t want to offend them that way. But my feeling and my read and my discussion with physicians is they are more likely and interested to be data driven today, and they are aware that they are looking at outcomes based medicine.”

Even though Ferkovic believes there’s more openness in the profession today, doctors are still cautious.

Key information

Dalton suggests that if physicians are considering an ACO arrangement there are key questions to ask. Is the sponsoring ACO financially stable? Does it have a historical track record of operations? Does it have a management team that is experienced in managed care? Does it have the necessary legal and financial expertise to know what they’re doing? Do they have a broad enough network of physician participants that they’re going to be successful?

Overall, do the people involved have experience in terms of working in managed care relationships, and do they have experience in terms of coordinated care and care management to know the opportunity to have better care that is less expensive?

Information is critical, Ferkovic agrees. For physicians, commitment to an ACO arrangement means investment of both time and money, because making the change is not as easy as flipping a switch.

“Unless you’re in a market where it’s very clear that there’s a good plan, that there is a leader of the movement that people trust who has a record of getting things done, then you’re going to have uncertainty,” he says. “Right now there are two canoes out there, and everybody has one foot in each canoe. You just hope that they don’t split apart.”