Accountable “Control” Organizations

What’s in a name? That which we call a rose by any other name would smell as sweet.

Shakespeare, Romeo and Juliet

To zealous health reformers the name Accountable Care Organization (ACOs)sounds and smells sweet. To them, ACOs will make physicians and hospitals accountable, will save money, will lift quality of care, and in the process, ACOS may even save Medicare.

Substitute the word “Control” for “Care” in the name, however, and the ACO concept soon begins to fall apart. When it comes to who sets the rules, collects, distributes, and loses money, defines quality, and directs patients, “control” is everything. To doctors ACOs by another name, Accountable Control Organizations do not smell as sweet.

Who would enter into a relationship in which:

• losing is a given, at least for the short term;

• an outside agency sets the rules;

. Your competitor disperses the "savings";

• distribution of "savings" is delayed;

• government is the principle beneficiary.

These are a few of the reasons many physicians regard Accountable Care Organizations as Accountable Control Organizations – and therefore, as DOA (Dead on Arrival).

History As Guide

If history is any guide, these physicians may be dead right. At least that is my experience. In the early nineties, as chair of a Physician Hospital Organization (PHO) in a 250 bed hospital, I helped introduce 100 bundled bills for hospital procedures, for which the hospital took a 10% discount and the specialty physician groups a 3% discount. We backed the bundled bill with reinsurance in case the cost exceeded the collective bill.

Our bundled bill concept failed in the marketplace because the state Blue Cross organization rejected the concept. The Blues preferred to negotiate with hospitals and doctors separately, presumably as part of a “divide and conquer” strategy.

At about the same time, two colleagues and I launched the National Organization of Physician Hospital Organizations. The name had a nice ring and zing – physicians and hospital working together for the common good and to lower costs.

But, alas, the PHO concept lasted only a few years. Physicians quickly complained hospitals controlled the process. Doctors dubbed “PHOs” as “HPOs,” and the PHO concept died in the cradle. We tried to save our organization by changing the name to “National Organization of Integrated Care Organizations,” but that too failed.

What lessons did I learn from our failure?

• The name of an organization is important, but it is not enough.

• Physicians are reluctant to enter into an organization relationship in which they are guaranteed to lose money.

• Physicians and hospitals view themselves as competitors as well as collaborators.

• The success of any collaborative effort depends on health plans as well as hospitals and doctors.

• Specialists , on whom hospitals depend for the bulk of their revenues, are reluctant to enter into a binding hospital relationship, when they are doing well on their own.

In the current exercise in name calling, I would introduce a word of caution about the word “accountability.” Who is “accountable” for costs of care? Doctors and hospitals? Yes. But patients, too, through their unhealthy behaviors and compliance or non-compliance with doctors’ orders are accountable too. Indeed, patients may be a more potent factor in determining outcomes than either doctors or hospitals.

Finally, I am skeptical whether ACOs will ever get off the ground because of:

• expense of hiring lawyers and consultants.

• paperwork and time needed to meet federal rules.

• presence or absence of a primary care base.

• effectiveness of incentives for patient behavior.

• need for expensive interoperative IT systems.

I doubt if all these conditions and underlying psychological factors can be resolved in a timely enough fashion to control costs, either in the short or long term.