Where do Pathologists fit into Accountable Care Organizations? – Part 1

The following post and subsequent posts to follow on ACOs and Laboratory Developed Tests (LDTs) have been written by Ben Calhoun, MD, PhD. Dr. Calhoun is a practicing surgical pathologist in Charlotte, North Carolina with expertise in breast pathology.  He trained at Yale and Vanderbilt and went to medical school and graduate school at the Medical College of Georgia. He is the Medical Director of Surgical Pathology for Carolinas Laboratory Network and, in his spare time, is an MBA student in the McColl School of Business at Queens University in Charlotte (anticipated graduation in December 2011).

– My personal thanks to Ben for his insight and thoughts.  Welcome to the blogosphere.

The short answer to the question "Where do pathologists fit into Accountable Care Organizations (ACOs)? is: no one knows for sure.  But, it is still probably worthwhile to know something about ACOs and some of the latest commentary of on how physicians and their practices may be integrated into ACOs. In this post, I’ll start with  the definition of ACOs, point you in the direction of some good general information, and discuss and possibilities for the leadership of ACOs (hospitals versus physicians).

The Centers for Medicare and Medicaid Services (CMS) defines an accountable care organization (ACO) as “an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to [the organization].”  As mandated by the Patient Protection and Affordable Care Act of 2010 (PPACA), the Medicare shared savings program for ACOs will begin no later than January 2012.

A recent Health Policy Brief in Health Affairs contains a nice overview of the ACO mandate in PPACA, the possible structures of ACOs, and eligibility criteria for organizations that aspire to be ACOs and participate in the shared savings program.  For another good article in Health Affairs on how independent physicians in general may fit into ACOs, take a look at the January 2011 paper by Shields et al.

For a provocative discussion on where the physicians or hospitals will lead ACOs, read this perspective from Robert Kocher and Nikhil Sahni in the New England Journal of Medicine.  The authors discuss the scenarios of ACO leadership by either hospitals or physicians, and they correctly point out the hurdles to physician leadership of ACOs, including: 1) the requirement for an unprecedented level of clinical, administrative, and financial collaboration among physicians, 2) the difficulty in allocating shared payments among primary care physicians and specialists, some of whom do procedures, 3) the required investment in information technology solutions to document and enforce accountability, and 4) the likely need for increased professional management to coordinate all of these activities to qualify for bonus payments from the shared savings program.

Kocher and Sahni (correctly, I think) outline the zero-sum game that hospitals and physicians (who need to collaborate now more than ever) face: “If physicians come to dominate, hospitals’ census will decline, and their revenue will fall, with little compensatory growth in outpatient services, since physicians are likely to self-refer……Conversely, if hospitals come to dominate ACOs, they will accrue more of the savings from the new delivery system, and physicians’ incomes and status as independent professionals will decline. Once relegated to the position of employees and contractors, physicians will have difficulty regaining income, status, the ability to raise capital, and the influence necessary to control health care institutions.” (emphaisis added)

What do you think?  Will hospitals or physicians lead ACOs?  Are these two possibilities mutually exclusive?  Will there be regional variation with the outcome dependent on the relative market position of integrated delivery networks (IDN) and physician groups?  Can/will physicians independently align themselves and form viable physician-led ACOs?  Do physicians have the access to capital required to invest in ACOs?

If you are interested in following developments with ACOs, I recommend the following sources:

The New England Journal of Medicine Health Policy and Reform web site.

The Health Affairs blog.

The Center for Medicare and Medicaid Innovation (the Innovation Center) web site and blog.

In the next installment,  I’ll discuss a newly announced role for the College of American Pathologists (CAP) and response of the American Society for Clinical Pathology (ASCP) to the request for information (RFI) from the Center for Medicare and Medicaid Services (CMS).  Ben Calhoun