Waiting for ‘ACOcor?’

Some of you with an event horizon a tad longer than the recent focus on social media, web 2.0 or health 2.0 energizing innovation in healthcare may recall the by-gone era of physician practice management companies, aka ‘PPMCs.’

The PPMC industry witnessed roughly a 10+ year run (circa 1990s – 2000s) with cheerleaders on Wall Street championing the likes of MedPartners  (the carcass of which still exists today albeit in the form of the PBM, CVS/CareMark), FPA Medical, and PhyCor.

Due to some of its business practices and value proposition claims, PhyCor garnered its dis-proportionate share of the notoriety as the ‘poster child’ for a failing if not fundamentally flawed (perhaps pyramid-like) business model.

Yet, many of the sales points to prospective medical groups and/or acquisition candidates sound familiar to [ACO] consolidation plays we’re hearing today, i.e., overhead reduction via operating economies of scale, leveraging group discounts, pooling managerial excellence and best practices, and higher quality net revenue via superior contracts with payors due to increased purchasing leverage and better geographic dispersion/service area coverage.

All of the above are tangible and valid reasons why the PPMC pitch made so much sense. Yet few if any seemed to realize the operating benefits in any consistent way ergo the blood bath that followed. We might mention one survivor of that period, then known as ‘Physician Reliance Corp’, who was recently acquired by McKesson albeit as the rebranded nameplate of US Oncology.

So what’s the relevance today, and what is meant by the spirit of an ‘ACOcor’ entity?

Many of you will no doubt be familiar with the buzz associated with the March release of the notice of proposed rule-making relative to accountable care organizations (ACOs). Many of the usual (AHIP, AHA, etc.) and even not so usual suspects (AMGA) have gone on record with their displeasure with specific provisions of the NPRM.

Reading the ACO tea leaves is like relying on a weather forecast, don’t bank the farm on it. Yet, if most if not all of the objecting providers sit on the sidelines v. embrace the opportunity to transform their current business models and mindsets, the door will be thrown wide open for enterprising third parties who see wisdom in the tapestry of CMS, HITECH and ONC as dots connecting a rather purposeful re-engineering of the dysfunctional US sick care non-system.

Perhaps the era of PPMC  2.0 is here, and an enterprising successor to PhyCor is in the works as we speak albeit in ‘stealth or semi-stealth’ mode?


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