Successful Physicians Require Capital and New Practice Models

A man should never be ashamed to own he has been in the wrong, which is but saying, in other words, the he is wiser to-day than yesterday.

Jonathon Swift (1667-1745), Thoughts on Various Subjects

Over the years, I have consistently positioned myself on the side of individual physicians as key to the best health system the U.S. has to offer.

I have been wrong. I should have listened to my own advice back in 1988, when I wrote in And Who Shall Care for the Sick?The Corporate Transformation of Medicine in Minnesota, ” To survive and thrive over the long haul, physicians will have to fight fire with fire and form doctor corporations.The other "fire" is health care corporations with access to capital, mechanisms for dealing with administrative and bureaucratic tasks, the ability to organize complex technology, bringing together professionals from various fields to deliver service as a team).

Corporations who have done these things are winning. Winning corporations include: the Mayo Clinic, large integrated hospital systems, Kaiser Health, medical megaclinics, UnitedHealthcare, and other entities that organize doctors into teams or look upon doctors collectively. Private practices by individuals or small groups of individuals are losing due to lack of capital and the capacity to do the other things.

There are signs physicians are changing and recognizing that physician collectivism rather than individualism will win the day.

That is why groups of physicians forming specialty centers to perform one procedures to a limited set of procedures or common disease like diabetes or cancer have emerged as formidable health care competitors.

That is why physicians are partnering with hospitals to gain market share in local and regional markets.

And that is why the Obama administration is pushing Accountable Care Organizations (ACOs), led by hospitals and physicians sharing “savings” are one of the pillars of the health care law. At this early stage, ACOs have a mixed track record. Many existing physician organizations declined to join the ACO movement, and some of the ACO pioneers have dropped out because of expense, bureaucratic hassles, hostility of specialists, failures to save money, or the feeling they can do ACO-type organizations on their own.

But ACOs remain in the organizational chase, and their numbers are growing.

There are now 522 total accountable care organizations are serving 15 to 17 percent of the U.S. population. The 522 total of ACOs is an increase from 370 in September 2013 and 258 in February 2013. The majority of these are CMS ACOs — Pioneer ACOs, Medicare Shared Savings Program ACOs, Medicaid ACOs or participants in the Physician Group Practice Transition program. CMS' latest round of ACO approvals in January brings the total number of Medicare ACOs to 368, up from 235 in July 2013. Despite their target populations, the Medicare ACOs are still serving an estimated 33 million non-Medicare patients.

There is nothing inherently wrong with physicians being part of a corporate team that delivers the best care and the best technologies that medicine has to offer. But it requires capital and organizations to do these things right. The important thing is to retain clinical autonomy, offering high levels of cost-effective service, and keeping the patients’ best interests in the forefront.