ACOs: Another Top-Down Idea, Another Likely Dud

Here’s the problem with ACOs: They are a tool in a big tool box of care and cost management tools but, like all of the other tools over the years like HMOs and IPAs, they won’t be used as they were intended because everybody—providers and insurers—can make more money in the existing so far limitless fee-for-service system.

Robert Lasweski, “Why ACOs Won’t Work,” The Health Care Blog, April 7, 2011. Robert Laszweski currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia.

April 11, 2011 - I have spent most of my life as a physician watching Washington-based policy solutions go down in flames and up in costs and bureaucratic smoke, leaving independent physicians in the ashes.

First, it was HMOs,

then, IPAs,

then, physician companies on the stock market,

then, integrated health systems,

then, hospital employment,

now, accountable care organizations.

Each solution requires organizing doctors into business-oriented groups with outside oversight.

Each approach fails because physicians treasure their autonomy and stand more to gain in peace of mind from staying the way they are, as mavericks practicing fee-for-service medicine in order to stay close to and to best serve their patients.

Here, according to the Engelberg Center for Health Reform at the Brookings Institute, a liberal-leaning, influential Washington, D.C. think tank, are the characteristics of accountable care organizations that should be good for the U.S, but are unlikely fail to catch fire.

ACO Characteristics

• General strengths and weaknesses – Makes hospitals and physicians accountable for total per capita costs and promotes coordinated lower-cost care, but does not require patients or physicians to “lock-in” into ACO.

My questions: Why should physicians join n ACO if the ACO intent is to lower physician income and force them into partnerships with hospitals with which they now compete? Anyway, what’s in ACOs for patients?


• Strengthens primary care directly or indirectly - Designed to give physicians incentives to focus on disease management within primary care through medical homes and partial capitation.

My question: Is delayed gratification of sharing savings with hospitals sufficient incentive to overcoming barriers of spending hundreds of thousands of dollars, even a million, for setting up an ACO and installing EHRs to tracking population health?

• Fosters coordination among all participating providers - Designed to provide significant incentives to coordinate among participating providers.

My question: What is the incentive for specialists, who constitute 2/3rds of all American physicians, who are doing just fine outside ACOs, and who stand to lose income by playing second fiddle to primary care physicians and hospital administrators?

• Removes payment incentives to increase volume of patient visits - Adds incentives based on value , not volume.

My question: Do not patients consider hip and knee replacements, coronary stents, cataracts, pacemakers – to be of “value,” as evidenced by the increased volume of these procedures? Gatekeeping and capitation has already been tried and failed, Why would it work now?

• Fosters accountability for total per capita costs – Offers shared savings when total per capita costs are reduced.

My question: For the typical physician and hospital, don’t you think “total per capita costs” is an abstraction that does not apply to them?

• Requires providers to bear risk for excess costs - The present model does not require physician or hospital risk sharing.

My question: Get real. Do you really believe hospital and doctors, who are already paid at 70% to 80% of private plan rates by Medicare, with beds and doctors in short supply, are going to willingly bear risks to join ACOs?

• Requires “lock-in” of patients to specific providers - Allows patients to be assigned on basis of previous patterns of care but includes incentives to provide services within realm of participating providers.

My questions: Why would patients abandon their present pattern of choice of hospitals and doctors for a theoretical concept to follow government mandates that limit those choices? Why would physicians and hospitals abandon the known for the unknown?


Richard L. Reece, MD, has posted 1725 blogs at medinnovation blog over the last four years. His main themes concern health reform and innovation and how they impact physicians and American culture as a whole. He works closely with the Physicians Foundation but his opinions are his alone. He has written eleven books. His latest book, The Health Reform Maze, is now at Greenbranch Publishers and will be released in June. Doctor Reece’s website, www.doctorreece.com, is now up and running He invites comments and questions on his blog and will respond to each comment or question on his blog or to him directly at 860-395-1501 or rreece1500@aol.com.