In the early ‘70s, ‘80s and ‘90s we worked on a concept similar to accountable care organizations (ACOs) in California. We tried to establish a program that would cover risk for our patients’ care with a lot of enthusiasm and effort. But unfortunately, we had very little success. It was just so complicated and expensive to get the idea off the ground.
Many hospitals across the country are now working on the effort again and this time may be different. However, some states will have more challenges than others when it comes to establishing ACOs.
California in particular is in a difficult situation because of the corporate practice of medicine. By law, private hospitals in California are prohibited from employing physicians. So for ACOs to work, this would need to change in California. Legislative reform would have to occur.
In the late ‘80s five hospital systems tried to put a program together to contract for care throughout California. However, this attempt, too, did not get off the ground. In most states you would have to obtain a license from the insurance department to take the risk of providing total patient care, and it was very difficult to get that license unless you could show that you had the resources to cover the exposure of the risk involved.
As we fine-tune the ACO model, flexibility and appropriate incentives will be needed for the idea to become a reality. The ACO model will need to be satisfactory to physicians. Physicians will need to be involved in determining incentives for delivering care and reimbursement rates. It is very important to have doctors help craft the model, because we need their support and buy-in for ACOs to be successful.
Establishing this new model of care is no small task. But with major healthcare leaders coming to the table to test what will work and how we can overcome certain hurdles, we just may be successful this time.
Don Ammon blogs regularly at Action for Better Healthcare.