Monday, April 4, 2011

A Forced Marriage: Hospitals and Doctors in Accountable Care Organizations

Forced marriage is a term used to describe a marriage in which one or both of the parties is married without his or her consent or against his or her will. A forced marriage differs from an arranged marriage, in which both parties consent to the assistance of their parents or a third party (such as a matchmaker) in identifying a spouse, although the difference between the two may be indistinct.


April 4, 2011 - I see the Obama administration has just released a 429 page document, up from 7 pages in the Patient Protection and Affordable Care Act, describing Accountable Care Organizations (ACOs) and specifying rules and regulations for their formation.

Some government reform enthusiasts are calling ACOs as a “marriage made in heaven,” because of their potential for cutting costs, raising quality, and coordinating care. The basic idea is that you slash costs for those 10% of Medicare patients that produce 70% of costs by herding patients, physicians, and hospitals into the same feedlot and putting them on a diet consisting of fixed budgets and bundled bills. Some go so far as to call ACOs the “Last Great Hope” for saving Medicare.

Critics of the Accountable Care Act, however, which include hospitals and physicians, are not so kind. They are characterizing ACOs as a “shotgun wedding” or a “forced marriage,” Whatever you call the wedding, responses to invitations to the wedding and the wedding reception are mixed. Poll

A poll at, website directed mostly at hospital executives, yields these results, when executive were asked:

What impact will Accountable Care Organizations have on hospital-physician relations?

• Deteriorate. 39%

• Improve, 36%

• Stay about the same, 23%

Physician Foundation Survey

A survey conducted by the Physicians Foundation of more than 40,000 practicing physicians produced these answers, when the physicians were asked this question,

Health reform provides pilot projects to test “bundled (capitated) payments” for episodic care, What is your view of bundled payments?

• A generally good idea, 11%

• A generally bad idea, 68%

• Unsure, 21%

These responses are not directly comparable, but they do reveal nervousness among hospitals and doctors, both of whom stand to lose income, and both of whom worry about who will be in charge of ACOs.

Here is how Donald Berwick ,MD., administrator, views the future of ACOs:

“Whatever form ACOs eventually take, one thing is certain: the era of fragmented care delivery should draw to a close. Too many Medicare beneficiaries — like many other patients — have suffered at the hands of wasteful, ineffective, and poorly coordinated systems of care, with consequent costs that are proving unsustainable. CMS believes that with enhanced cooperation among beneficiaries, hospitals, physicians, and other health care providers, ACOs will be an important new tool for giving Medicare beneficiaries the affordable, high-quality care they want, need, and deserve.” ( Health Policy and Reform, “Launching Accountable Care Organizations – The Proposal for the Medicare Shared Savings Program, “ March 31, 2011, New England Journal of Medicine, March 31, 2011).


I will conclude by citing statistics from the Washington Report, an informative non-partisan newsletter report of the Physicians Foundation. These statistics summarize federal activities and rationales behind ACOs.

• April, 2011, new ACOs rules released, Federal Trade Commission and Justice Department put out guidelines informing hospitals and doctors of “safety zones” to prevent anti-trust abuse. The public given 90 days, until May 30, to respond.

• HHS says more than half of Medicare recipients have 5 or more chronic diseases, such as diabetes, hypertension, and kidney disease, one in 7 admitted to hospital has been subjected to harmful medical care, and 1 in 5 readmitted in 30 days. Proposed rule, HHS claims, would save $960 million over 3 years for Medicare, which now has a budget of $550 billion.

• Groups of ACO providers must see at least 5000 patients a year on fee-for-service basis and must sign 3 year agreements to be approved by CMS, CMS will approve 75 to 150 ACOs caring for 1.5 million to 5.0 millon Medicare patients. ACOs will require installation of electronic health records costing form $132 to $26 million.

There You Have It

So there you have it - the rules for engagement and marriage of hospital and physicians, as administered by HHS, CMS, the Federal Trade Commission, and the Justice Department.

The only thing missing is a Justice of the Peace.

Richard L. Reece, MD, has posted 1720 blogs at Medinnovation blog over the last four years. His themes include health reform and innovation and how they impact physicians and American culture as a whole. He works closely with the Physicians Foundation. His opinions are his alone. He has written ten books on health reform. In 2007 Innovation-Driven Health Care was published, and in 2009 Obama, Doctors, and Health Reform. In June 2011, Greenbranch Publishers will print The Health Reform Maze, A Roadmap of Good Intentions and Unforeseen Consequences. He welcomes comments and will comment on each.

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