Sunday, July 22, 2012

Accountable Care Organizations (ACOs) and Physicians: Are We Partners or Prey?

During my college years, we loved the album Bat Out of Hell by Meat Loaf. We would wail along with Meat Loaf as he screamed out his passionate interpretation of Paradise by the Dashboard Lights. Another memorable song on that album was Two out of Three Ain’t Bad, which offers an important lesson to those of us interested in health care reform.

No, Meat Loaf was not a medical policy wonk who offered health care solutions via allegory in his ballads. It’s the song title that caught me as I read yet another article on accountable care organizations (ACOs). Take a look at this banal 3 word description.

Accountable Care Organization

These new organizations have much more to do with accountability and organization than they do with care. In other words, Two Out of Three Ain’t Bad.
ACOs are another coercive mechanism to track and compare physicians using quality metrics that are far removed from true medical quality measurements. As practicing physicians understand, and government reformers don’t, defining and measuring medical quality isn’t counting beans in a bottle. They claim they can count what can’t be easily counted. Conversely, just because something can be easily counted, doesn’t mean it really counts.

Of course, the ACO concept is attractive - more accountability, lower costs and higher medical quality. This 3-legged stool can stand only if all 3 of these legs are sturdy. I’m skeptical.

These ‘partnerships’ between hospitals/insurers and physician groups provide lump sum payments to doctors to care for a population of patients. If physicians spend less money on care than this sum, then they can retain the savings. This sounds quite reminiscent of the Health Maintenance Organization (HMO) era, where there was a conflict of interest that restricted patients’ medical care in order to save money. We recall how popular this model was for physicians and for our patients.

HMOs were soundly rejected. Are ACOs merely repackaged HMOs in new bottles?

Beware of any ACO that contains the word partnership, unless you consider a 95-5 split to be a partnership. A mouse captured in the talons of a raptor doesn’t feel that he and the bald eagle are partners.

For those who simply must know ACO details, I encourage you to peruse the 429 page proposal issued by the Center for Medicare & Medicaid Services (CMS) in March 2011. If any reader does so, kindly leave a comment below so we can arrange for an expeditious psychiatric referral for you.
Of course, ACOs are not really about quality, any more than pay-for-performance initiatives are. They are about cost control and reimbursement redistribution. Physicians sign up, not because we are smitten by ACOs promises, but because we don’t want to be excluded from the panels.

Will ACOs, in their ultimate form, be good for patients? This is unknown and unknowable at present. ACOs are swirling in the wind, and various constituencies are swatting at it. We don’t know what its final form will be or where it will land.

So, what’s the ACO score so far? 

  1. ACOs will employ thousands of bean-counting bureaucrats, which will reduce unemployment.
  2. ACOs will help to control medical costs.
  3. ACOs will be championed by physicians throughout the country.
Which of the above statements are true?  Meditate on the words of Meat Loaf, a prophet in his generation. Two Out of Three Ain’t Bad.


  1. Well done...and right on the mark! Clearly we are being pushed toward socialized medicine.

  2. Excellent post.

    I'd suggest rewording #3 as:

    3.ACOs will be championed by those physicians throughout the country who, having found themselves incompetent at clinical medicine, have dumped it for parasitical administrative work.

    ACOs are a bad joke, but I'm not sure what they have to do with "socialized medicine."

  3. Appreciate comments. Term 'socialized medicine' is often used loosely to refer to Obamacare's intended final destination. As pointed out in the post, ACOs have not arisen from physician demand. It remains to be seen to what extent their function is to cut costs rather than to maintain. or enhance quality. New docs today are entering a different medical universe than the one I did.

  4. ACOs, in all likelihood, are the current 'shiny object' . . . we'll spend years "discovering" that they don't work. Why? This interesting article at the HealthcareRenewal website is enlightening.