Let’s Wake Up About ACOs

Posted by

Paul Levy

Posted 11/30/11 on Not Running a Hospital

Comments by two folks recently should reawaken our concern about how to hold accountable care organizations accountable and whether creation of ACOs will lead to market dominance that will not bring value to patients.

Back in 2009, I noted: 

Here in Massachusetts, there is only one such entity that approaches the definition of an ACO, Partners Healthcare System. But there is no sign that it has used its size and scale to deliver care at a lower cost. Indeed, there is evidence that it has used its market power to extract higher rates from insurance companies. Likewise, there are no data to show that quality, safety, and efficacy in the delivery of care throughout the Partners system is better than other community hospitals or academic medical centers.

Indeed, a recent post suggests that such economies may be at risk in ways I hadn’t considered.

Now, see these comments from Federal Trade Commissioner J. Thomas Rosch, as reported by Avik Roy on The Health Care Blog:

“The net result” of ACOs, says Rosch, “may therefore be highercosts and lower quality health care—precisely the opposite of its goal.”

Rosch notes that the Centers for Medicare and Medicaid Services (CMS) have been running an ACO demonstration project, called the Physician Group Practice Demonstration, for several years now. “The results were nothing to crow about,” says Rosch. “Even after five years of the project, a majority of the participating practice groups did not achieve any cost savings.”

In theory, the Federal Trade Commission has the authority to challenge monopolistic hospital mergers. But in 1996, the FTC’s policies on health care mergers were amended to provide a safe harbor to competing hospitals that achieved sufficient clinical integration. “I thought then, as an antitrust practicioner who frequently represented health care providers, that the 1996 amendments…were the biggest loophole in the antitrust laws I had seen,” says Rosch. “Subsequent Advisory Opinions issued by Commission staff…were about as clear as mud.”

Now, look at the remarks from former Massachusetts Governor Michael Dukakis, who, you might remember, introduced the first universal health care law to the state several decades ago.  Whether you agree with his remedy or not, it is prudent to regard his warning carefully:

Speaking during the Harvard School of Public Health Voices from the Field series, Dukakis said urging the health care market to fix itself is “a colossal waste of time.”

“If the market doesn’t work you have to regulate,” he said. “R-E-G-U-L-A-T-E. Thoughtfully, responsibly, and with the active involvement of all of the people who provide health care and who are very important to us.”

ACOs and global payments. What did we used to call them? HMOs and capitation. We tried that, folks. It didn’t work. Why are we doing it again?

I have noted before that public policy formulation in the health care arena is characterized by a striking lack of rigor.  Here are two experts in the field who are urging us to be cautious about basing the new design of health care on a wish and a prayer.  It is interesting to ask why they are being ignored.  Can it be that those with market power in this field have seen a answer to theirproblems, as opposed to ours?

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