Hospital Physician Relationships, Accountable Care Organizations , and Health Reform

Accountable Care Organizations, the bonding together of hospitals and physicians into common entities, so that Medicare can charge bundled or capitated fees for episodes of care for chronic disease is an integral part of the health reform law.

From the Medicare standpoint, this bonding strategy makes sense. It simplifies things because one is dealing with fewer large entities rather than thousands of doctors; it allows more rational budgeting; it makes care protocols easier to implement; it is a start to phasing out fee-for-service; and it addresses the growing problem of paying for chronic diseases in an aging population.

But there is a problem. The most prominent of these is simply a matter of control between hospitals and doctors. Who controls setting the overall fee and fees for each of the physicians involved? As one physician commented, “ACOs stands for Accountable Control Organizations.” This is the issue that contributed to the fall of Physician Hospital Organizations (PHOs), which some physicians dismissed as HPOs, or Hospital Physician Organizations, meaning that hospitals were in control.

It is likely ACOs will take many forms, depending on hospital and physician leadership, on legal barriers, and on the contentiousness and amicability of existing hospital-physician relationships.

I bring this matter up because I have written or co-authored two recent books on the subject:

• One, Seizing Opportunities in Hospital-Physician Relations to Serve the Healthcare Customer

• Two, Sailing the Seven “Cs” of Hospital-Physician Relationships – Competence, Convenience, Clarity, Continuity, Competition, Control, and Cash.


Readers of this blog might want to order a copy from PSR Publications (www.practicesupport.com). Discounts on bulk quantities of books published are available to professional associations, corporations, and other qualified organizations and marketers.

Here is an excerpt from The Seizing Opportunities book
What can a hospital CEO do to influence doctors to become strategic partners rather than competitors? Well, first, the CEO should understand the essence of the physician culture.

1. Doctors in a single specialty, though considered conservative and slow moving, speak from the same page. They know each other well, have similar practices, have a common language, and unite behind common business purposes. When uneasy or suspicious of hospital motives, they can move with astonishing speed to form competing entities.

2. Certain specialists, including heart surgeons, cardiologists, orthopedic surgeons, and oncologist – the economic lifeblood of most hospitals – are accustomed to acting decisively in clinical matters. This decisiveness carries over into business affairs.

3. Doctors are threatened by a hostile business climate and will move quickly to gain control of their economic and clinical destinies.

4. Doctors pride themselves on being independent Professionals and are accustomed to acting with dispatch and with inadequate and uncertain information.

And so forth. In the book, I list 9 other characteristics of the physician culture that hospital executives should understand about doctors.