ACOs and the Control of Physician Economic Behavior

We've been down this road before. Back in 1988, we called the present day ACOs HMOs. The HMO idea was to control the behavior of primary care physicians by cutting down on hospitalizations and referrals to specialists through gatekeeper models.

The net effect? Disappearance of solo practice, growth of groups, and massive hiring of doctors by hospitals and “integrated health systems,” and a backlash against HMOs and managed care in general.

In 1988, Minnesota, along with California, was an epicenter of the HMO movement. As Editor of Minnesota Medicine, I wrote,

“ I shall discuss the struggle now going on for control of health care. This struggle is mainly between the management of corporations and physicians. It is a struggle for power. To be effective in the marketplace, corporations have to harness physicians to corporate goals, thus creating internal discipline and compliance; to be independent professionals, physicians have to be free to choose what they want for patients. The government, economists, and leaders of large organizations favor the corporate strategy because it is a way of making physicians behave economically.” (And Who Shall Care for the Sick? Media Medicus, 1988).

ACOs are HMOs revisited. Both have the primary purpose of controlling physician behavior. The difference between ACOs in 2011 and HMOs in 1988 is that a number of controlling management tools have been added - pay-for-performance, evidence-based-medicine guides, clinical algorithms, electronic medical records, global budgets, and “savings” to be distributed among hospitals and doctors.

Will ACOs work any better than HMOs? HMOs ran into backlash among doctors and consumers, both of whom resented the restraints placed up their clinical freedoms?
HMOs controlled costs, but only temporarily in the early 1990s.

I do not know. I do know the management tools I mentioned above – P4Ps, EHRs, and other tools for electronic monitoring – have a mixed record for saving money and improving quality.

As John Goodman says in his February 28 blog, “The HMO in Your Future,”

“Whether they raise or lower costs, whether they raise or lower quality, there is one thing that ACOs will indisputably accomplish. They will drive doctors into organizations where their behavior can be controlled. For the first time in our history, both the practice of medicine and the way money is spent on medical care will fall under federal control.”