Are Institutionally Led ACOs ‘DOA’? I Say Heck Yah!

By Gregg A. Masters, MPH

At the end of the [business model and strategic positioning] day, it’s all about the intangible but mission critical ‘C’ word, i.e., culture, and whether two traditionally oppositional styles (physician v. hospital) can mash-up and ‘meaningfully integrate’ (clinically, legally & workflow wise) where previous attempts during the 80s and 90s failed.Are Hospital Led ACOs DOA?

Truth be told, fast forward a couple of decades and that cultural divide has yet to be reconciled a least on average. Granted there are some exceptions (most notably progressive integrated delivery systems who’ve aligned financial incentives but more importantly ‘vision’), and many of the oppositional dinosaurs (physician ‘free agency’ and solo practice are on an accelerated decline) are retiring or otherwise stepping aside. Yet even with the emerging digital natives sporting MD degrees, the cultural divide between clinicians and administrative types (or latter day suits of all stripes), remains a geopolitical land grab just beyond the reach of the individual ‘P’, “H’ and thus ‘O’. Yet, all healthcare is local right, so clearly there are differences based on locality and market considerations.

What’s different today?

Most will say that the difference between PHO 1.0 (for the casual reader or those with a professional event horizon shorter than a decade plus, PHO = a physician/hospital/organization), and the ACO movement spawned by the Affordable Care Act and most visibly iterated as PHO 2.0 roll-ups (since many of the more visible and publically tagged ACO efforts include an ‘H’) nets out to an accessible if not the ‘new and improved’ ubiquitous technology edge, coupled with smarter ‘productivity’ systems to hold docs accountable post acquisition (risk transfer) of practice assets or hiring.

Back when the internet was just getting going circa the 1990s and Jim Clark was pushing the Healtheon vision – an ambitious agenda to virtualize if not harmonize the complex healthcare ecosystem, we did not have the ubiquitous connectivity and prevalence of user friendly devices including mobile and tablets or the enabling bandwidth let alone national coverage.

Reading the ‘tea Leaves’

Yet even in the face of ‘smarter people’, ‘better systems’ and increasingly accessible, ‘robust cloud based services infrastructure’ (IT and otherwise) with attractive price points, is the people challenge any different today? At least two data-points suggest otherwise evidencing the underlying ‘dis-ease’ associated with the implementation complexity of a ‘soft sell’ re-engineering of American healthcare via the aggregate market uptake of ARRA, HITECH and key ACA (ACO) provisions.

According to a Athena Health’s 2012 ‘Physician Sentiment Index‘:

  • 69% believe EHRs can improve patient care, down from 75% the year before.
  • 75% believe achieving Meaningful Use is a burden.
  • 53% believe the Affordable Care Act will be detrimental to patient care, up from 50% the year before.
  • 58% believe most or all of the Affordable Care Act should be repealed, and 26% believe that some elements should be repealed. Only 16% said to keep it as is.
  • 63% believe the shift to Accountable Care Organizations (ACO) will have a negative impact on profitability, up from 48% last year.
  • 54% believe the quality of care will decrease over the next five years.

Add to the mix the following headline: ‘Physician Turnover Hits New High as Demand for Primary Care Increases’, which reveals:

physician turnover reaches the highest rate since the first year data was collected in 2005, and exceeds pre-recession levels. Medical groups reported an average turnover rate of 6.8 percent in 2012, according to the 8th annual Physician Retention Survey from Cejka Search and the American Medical Group Association (AMGA).

The survey also reported turnover of 11.5 percent among advanced practice clinicians (APCs), which includes physician assistants and nurse practitioners.

Also noteworthy is from the report’s ‘Other Key Findings’:

‘Culture is the Top Controllable Turnover Factor: Lack of cultural fit was the third most common reason given for voluntary departures, and the most common factor within the control of a medical practice.’

‘Demand for Care Teams Intensifies: More than three-quarters (76%) of respondents plan to hire more primary care physicians in the next 12 months, 67 percent plan to hire more nurse practitioners and 61 percent plan to hire more physician assistants. Strong teamwork skills will be vital to successful coordinated care.’

Bottom Line

So that ‘primary care sucking sound’ (remember Ross Perot’s NAFTA warning?) mostly to build out and staff ACOs, medical homes and their derivative ‘high value’ networks, are creating an environment where the natives are clearly restless, while the disconnect between industry rhetoric and the on the ground reality of the transformational imperative has never been more acute, nor the stakes so high.

ACOs were purposefully visioned as physician led enterprises, yet as is often the case in healthcare innovation amidst a change resistent ‘just say no’ culture the capital partner steps in to steward if not direct the initiative’s vision of organization, governance and equity (fairness if not capital) issues. Moreover, hospitals (or their parent systems) are the likely source of ‘capital’ – financial, managerial and infrastructure, ergo they step into the void of physician leadership to move the needle albeit in their narrow view of self interest.

Most institutionally led ACOs therefore are dead on arrival unless there are compensating factors which infuse [group practice] physician culture at the center of the enterprise in pursuit of the triple aim, or hedges where hospital executives clearly see their role as transitional enablers and not drivers of a physician seeded transformational process amidst a sea of conflicting incentives, values and workflows.


Join the Conversation


  1. I take seriously the warnings in your posting. There are other problems with the concept of ACOs, which have to achieve all the interoperability and data analysis goals that would be required by an open, nationwide system, but don’t get the benefits that an open, nationwide system would provide. But your posting calls into question the future of the whole health care reform effort, not just ACOs or even meaningful use. I believe in the future of health care reform, but necessarily the future of the careers of the doctors who fail to see the need for reform. Perhaps we need to force the opening of more medical schools to train the many young, intelligent, dedicated people who can carry the field into the 21st century

    1. Thanks for the comment Andy. To say we all share culpability for the collective industry failure to solve these problems would probably be a lie. Three decades of failure has ‘suddenly’ presented us with not just a house of cards on the verge of collapse, but clearly traceable causes for the risk posed to the global economy. It’s about time we found a way to a sober assessment of the problem and a framework to build a sustainable healthcare eco-system.

Leave a comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: