A Model For Integrating Independent Physicians Into Accountable Care Organizations

Mark C. Shields, Pankaj H. Patel, Martin Manning and Lee Sacks in Health Affairs


The Affordable Care Act encourages the formation of accountable care organizations as a new part of Medicare. Pending forthcoming federal regulations, though, it is unclear precisely how these ACOs will be structured. Although large integrated care systems that directly employ physicians may be most likely to evolve into ACOs, few such integrated systems exist in the United States. This paper demonstrates how Advocate Physician Partners in Illinois could serve as a model for a new kind of accountable care organization, by demonstrating how to organize physicians into partnerships with hospitals to improve care, cut costs, and be held accountable for the results. The partnership has signed its first commercial ACO contract effective January 1, 2011, with the largest insurer in Illinois, Blue Cross Blue Shield. Other commercial contracts are expected to follow. In a health care system still dominated by small, independent physician practices, this may constitute a more viable way to push the broader health care system toward accountable care.

Accountable Care Organizations Federal Trade Commission Physician-Hospital Organization Cost of Health Care Health Reform

The Affordable Care Act of 2010 included several delivery system reforms intended to address deficiencies in the way health care is delivered in the United States. Among these is the accountable care organization. The Centers for Medicare and Medicaid Services (CMS) defines an accountable care organization (ACO) as “an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to [the organization].”1

The ACO model is not confined to public programs such as Medicare and Medicaid. Advocates of ACOs contend that these future care systems will strengthen US health care by improving care, controlling costs, and being held accountable for results. However, there are at least four major challenges to implementing accountable care organizations across the United States. First is the dominance of solo and small-group independent physician practices that provide care to the majority of the US population. Second is the voluntary medical staff structure within most hospitals, which fails to engage physicians in leading the system changes needed to deliver consistently safe, cost-effective, and high-quality care.2–4 A third challenge is the dominance of fee-for-service reimbursement, which makes moving to more performance-based payment systems difficult. Fourth is the need to spur ACOs in the private, commercial market and not just confine them to publicly financed programs in Medicare and Medicaid.

Challenges To Overcome

Adjusting To The Dominance Of Small Practices

The current focus for ACO development has been on finding ways to build more fully integrated systems that for the most part would employ their own staff physicians. However, few such organizations exist. Most parts of the country have no such integrated health care systems, and fewer than 15 percent of US physicians are believed to be affiliated with them.5

Other types of accountable care organizations focused on solo and small-group physician practices could give the concept broader reach. Several models that could bolster the spread of accountable care organizations include physician-hospital organizations, independent practice associations, virtual physician organizations, and health plan–provider networks.2

Nevertheless, there are numerous reasons why the ACO model is difficult to apply to solo and small-group practice.6 Solo practitioners and small groups rarely have the capital to invest in the kind of information technology (IT) or quality improvement training for staff that is necessary to achieve ACO status.7 Their small size makes it difficult to implement key quality tools such as disease registries or electronic health records.8 Management support and a culture of developing consistent processes can help larger groups outperform small groups.9–11

Traditional Hospital Voluntary Medical Staff

The weaknesses of the traditional hospital medical staff structure…(read complete Health Affairs article, here).

Copyrighted and published by Project HOPE/Health Affairs as A Model For Integrating Independent Physicians Into Accountable Care Organizations, Mark C. Shields, Pankaj H. Patel, Martin Manning and Lee Sacks, Health Affairs volume 29, issue number 12.


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