Providers Leverage ACOs to Boost Reimbursement, Beat Competition

Tuesday, November 24th, 2009
This post was written by Melanie Matthews

William DeMarco, president and CEO of DeMarco and Associates, explains the growing appeal of accountable care organizations (ACOs) to providers hoping to increase profits and efficiency while improving care.

We have physicians that are organized into accountable health organizations, also known as accountable care organizations (ACO). The ACO is seen throughout the House version of health reform as well. The ACO can be thought of as a small- to mid-sized group practice that provides services that are tied to benefits or specific specialties in a given community. The ACO normally takes a payment very much like an episodic treatment group (ETG) — a combined or bundled payment. They take that bundled payment and work with it. If they come in under the amount that they’re paid, they get to save some of it, and if they come in over it, then they’re going to lose some of that payment as well.

Another way to look at these ACOs is as a medical group without walls — taking communities where there are onesies and twosies. They just don’t function like a group. They’ll never achieve the economies to scale, and they’re getting into trouble with the combination of both health plans and competing medical groups in the area. Through technology, these small groups can link together and act and think and leverage themselves as a larger group, giving them a reward and also an asset value they didn’t have before. This also allows them to coordinate services virtually between the medical group and the hospital — being able to do everything from scheduling services to obtaining lab tests more rapidly, and doing block lab scheduling for patients so they don’t have to wait for months to get the results.

These large national networks who have been out there for months and months are now starting to combine because a lot of the employers realize, “I can get a better deal if I go directly with top physicians and hospitals in this community with my 4,000 or 5,000 patients and lay it on the line, instead of having my patients be spread over 2,000 or 3,000 physicians in the area who might be part of this other club.” A lot of the third parties are contracting with employers, building these local networks and then building and reporting against guidelines. Employers are looking more for benchmarks than just benefits these days, aggressively negotiating fees and then working with health plans or becoming one.

We are seeing more physicians who are saying, “I can see the handwriting on the wall. We’re going to have our fees cut again. We’re going to see a lot of these health plans be able to come into the marketplace and start gathering various health plans. What was negotiating with two or three different plans now becomes a gorilla. I’m going to have to figure out whether I am going to have to create my own product or have a very clear alignment with one or two plans to champion my practice.” Because to continue to be on the downside of negotiation for fees and have them increase the number of reports that have to be sent doesn’t make a lot of sense.

Related Posts:

Comments are closed.