Are physician-led ACOs superior to hospital-run organizations?

Medicare’s ACOs have gotten off to a mixed start, with hospitals especially reporting financial challenges and some threatening to pull out of the Pioneer program. But some argue that physician-led ACOs may have some extra advantages, and could be a new source of competition.

“A key difference between physician-led ACOs compared with other ACOs, such as those organized by hospitals, is that physician-led ACOs have clearer financial benefits from reducing healthcare costs outside the physician group, which are much larger than physician costs,” write Mark McClellan, MD, a senior fellow at the Brookings Institution, and colleagues in the Journal of the American Medical Association.

“In contrast, hospital-based ACOs also receive shared savings for avoiding hospitalizations or shifting care to a less costly ambulatory setting, but those cost reductions are lost revenue for the hospital,” McClellan and colleagues write.

With those incentives, they argue, ACOs may present something of a win-win for independent physicians — an opportunity to remain autonomous, improve patient outcomes and earn a sustainable return.

[See also: ACOs can help medical homes succeed.]

With some 40 percent of ER visits and at least 10 percent of inpatient hospitalizations estimated to be preventable, “primary care has opportunities to help reduce spending,” they write. “Physician-led ACOs could also create efficient networks through their referral patterns, by partnering more closely with specialists, hospitals, diagnostic, and postacute services that provide evidence-based high-value care and that communicate and coordinate effectively.”

Both physician- and hospital-led Medicare ACOs have struggled early on. In their first year, 29 percent of the physician-led ACOs demonstrated savings over project baseline growth, compared to 20 percent of hospital-led ACOs. But ACOs in general might learn from a few physician-led accountable care ventures.

McClellan and colleagues offer as an example the Palm Beach Medicare shared savings ACO, a physician-owned and -operated venture serving 30,000 seniors in southeastern Florida. Established in 2012, the Palm Beach ACO docs have pursued “systematic improvements” in care transitions, through notifications about emergency department visits, admissions, and discharges, and through partnerships with nursing homes and home health agencies.

The Palm Beach ACO was one of 29 shared savings ACOs that exceeded its savings thresholds, saving some $22 million in the first year.

Learning from primary care

Another example of physician-led ACOs that health systems might both watch out for and learn from is Heritage Provider Network, an independent practice of about 2,100 primary care physicians serving one million patients, mostly in California, as well as Arizona and New York.

Created in 1979 amid the rise of HMOs in Southern California, the Heritage Provider Network now pursues a clinical model that tries to make managed care feel less “managed” and bridge gaps between social, personal and health issues before they grow into bigger, costly problems.

As part of a large commercial accountable care contract covering 70,000 lives and three Medicare ACOs, Heritage has tried to capitalize on community-and home-based interventions.

Some months, Heritage helps host 200 different events with community centers and assisted living facilities — from bingo to cooking classes to botanical garden trips — that offer new social interaction for patients and a way for a nurse to remind them about flu shots, blood sugar testing and the like.

“This is a population that has needed this for some time,” said Jonathan Gluck, senior executive and chief legal counsel at Heritage. “Patients who’ve only left their house to go the store now have something to do and friends to talk to. A lot of the issues that lead to repeated hospitalization are not simply medical issues, they are social issues.”

Those events, initially started to help connect with Medicare Advantage patients, also help Heritage primary care physicians develop trust with patients, which can be crucial when it comes to chronic disease management and decisions for high-risk (and high-cost) treatments, said Ian Drew, MD, the network’s chief medical officer.

Drew, who has worked at Heritage since 1987, calls it the “intimacy index”: “The more intimate we are with patients the more they will be amenable to our advice.”

While some of Heritage’s work is reimbursed on a fee-for-service basis, its primary care docs, most of whom are salaried, are prepaid per-patient per-month. The network’s model evolved out of an HMO environment, and some approaches remain the same, but the new accountable care paradigm is pushing more change, Drew said.

“The delivery of the metrics on accountable care depends on the ability to provide the population with services that have been proven to be successful and that has been developed on the HMO side for a number of years. We are not trying to reinvent the wheel,” he said.

“Where it gets completely different is where the accountable care population can make choices based on value-propositions. They do not need an authorization to access care. The patients get to see and access whichever specialist they want to, very similar to the FFS environment.”

Heritage physicians have made “a huge effort” to ensure that patients, particularly ACO beneficiaries, trust them enough to follow recommendations on which specialists and hospitals to use.

“We are very cognizant about where specialists go to provide patient care,” Drew said. “There is very little correlation between high prices and outcomes. There are community hospitals that can perform at the level of tertiary hospitals.”

“We know that the data show that many patients, especially seniors, are admitted for inappropriate reasons,” Drew said. “Care traditionally rendered in the ICU 30 year ago is now the medical bed, and now everything that was in the medical bed is either now at home or in nursing facilities.”

Along with other organizations, Heritage has started offering number of services in the home that would otherwise be administered in a hospital outpatient center, such as infusion and ventilator therapies.

Heritage also has a 24/7 hotline and can dispatch providers to patients home within two hours for urgent but not emergent concerns. For patients that do require emergency hospital admission or acute care, the network has tried to develop a coordination strategy that prevents readmissions, with a general practitioner and nurse working with patients on transition plans.