Accountable Care & Its Productivity Complex

It is absolutely absurd to reward someone for being less productive.

This entire principle is befuddling to me.

But, a government think tank has decided this is the future of American medicine. “We’ve discovered a better way to muddle with the healthcare market,” they say.

The previous (and also ridiculous) system, built upon an UNKNOWN fee-for-every-service, is now being replaced by a more accountable one.

Accountability, like safety, is an easy concept on which to build support. Why? Because we need accountability in healthcare.

If the term, Accountable Care Organization (ACO), is not commonplace for you yet, it will be. In fact, you may already be receiving your medical care from one right now.

ACOs are networks of doctors, hospitals, and other medical providers that share responsibility in the care and cost of a large population’s health.

Think of them as being the It.

And, It may be caring for you.

It is an alternative payment model. Our Health Department wants 50% of Medicare spending to be tied to It by the end of 2018. Recent legislation has further reinforced this.

Basically, here’s the scheme. The doctors and other people working inside It are supposed to behave as miniature insurance companies. Just provide care at the lowest cost, and It makes a profit.

I’ll say it another way.

Since meddling in the large health insurance market has resulted in less and less value for most Americans recently, the government figures that fragmenting insurance pools into smaller ACO insured groups will miraculously solve the crisis.

If you are having trouble following this logic, so is the government. Almost expecting It to fail, the government is heavily incentivizing the “market” so ACOs can exist.

Once again, this brings up the question, how much incentivizing does a good idea really need?

Many of the bureaucratic tanker ships we call healthcare systems have already bought into this ACO model. And, why not? You essentially get paid to be a healthcare monopoly. Suck patients into your system. Give them the appearance they should only seek medical care from you. Collect their money. Find a way not to spend it. And, you win.

Yes, you must document that your ACO is providing “quality” care to get the most funds. But, not to worry, It has a very expensive computer system designed specifically to check all those boxes for you.

THE LAW OF DIMINISHING RETURN

A buddy of mine is employed by an ACO institution. I am not. My buddy saw seven patients in clinic today. His schedule was full. I saw twenty. Just in the afternoon.

I don’t always see twenty in a half-day. It depends. I actually prefer to see less. But why twenty, today? To make more money?

This is where the ivory tower of apostles fighting capitalistic productivity have just lost their marbles. I saw twenty patients this afternoon because my phone at the office was ringing off the hook. People were having all kinds of problems. They needed to be seen. Today. And, my buddy? He had an opening in two months. His institution informs patients who need to be seen more “urgently” to go to the Emergency Department.

I’m not any smarter than him. I’m not a better doctor. But, I am more productive. My tugboat is better motivated to move that way.

But, the government has decided that tugboats must go. It is replacing them. And, the think tank promoting It wants you to believe that this is really for you and your health.

It is not.

It just promises to be cheaper for them.

And, while we are on this topic, I’ll tell you what they won’t. The concept of true fee-for-service isn’t bad. It has actually done more for our civilization’s economic prosperity than anything else. It’s what drives productivity. It’s not the devil they say you should fear.

A fixed fee for each medical service is the health culture for Walgreens, CVS, Walmart, telemedicine, and the like. Why is it so atrocious to pay physicians this way?

In America, we love to talk about how other countries do healthcare better and cheaper. Just pick one whose system you want to envy. Switzerland? Mostly fee-for-service. Australia? 90% fee-for-service. Canada? A majority of fee-for-service. Denmark? The same. Germany? Absolutely all fee-for-service.

In fact, do you really think America’s alternative payment model will uncover a quality-driven healthcare utopia previously overlooked by the rest of the world?

It seems more likely that It will become the antithesis of productivity, while true accountability will still await a market where you get what you pay for… and, yes, this works best when supply and demand determine a cost.

THE BAIT AND SWITCH

One of my patients recently received a letter in the mail. The letter said her insurance plan was changing. “Not to worry,” the letter said, “you are being enrolled in an ACO.”

It was going to take care of her.

It was sneaking in.

It was poking at her choice in medical care.

And, the letter actually told her this was a good thing.

* * *

Imagine you own a boat manufacturing company. Your job is to build boats you hope people will never use or enjoy. What a fun job, right? In fact, you actually make more money if you sell a boat that stays docked.

The quality of the boat you build is determined solely from certain specifications established by the Federal Boat Bureaucracy (FBB), who incidentally, has never driven a boat.

Your arrangement with the FBB causes a number of oddities to exist within the boating market. For one, despite the fact that you are in the business of making boats for people, your appeal isn’t really to the people who use them at all.

You don’t need to spend time visiting with your customers and learning their needs. You aren’t customizing boats for them. You hope the cheapest thing that floats will do!

Instead, your real job is to build a boat that “looks good” to the FBB. Attend a few of their seminars. Learn how to manipulate a few of their valued variables. Check a few of their boxes, and you’ve done your job well.

Ultimately, whether it’s boats or healthcare, or you’re a boating manufacturer or running an ACO, it doesn’t really matter. There is now just one lake in town.

As for the few yachts sailing there?

You know them well. They are your own.

NOTE: Special thanks to Margalit Gur-Arie for her excellent article, The Death of Fee-for-Service in Healthcare, which served as inspiration for this post.

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a walsh

Always an insightful read Dr Rocky.
My confusion w/r/t ACOs is this: On one hand you have outpatient and primary docs who’s goal is to keep patients out of the hospital with their “value based medicine” and on the other hand of the same “it”, are the hospitals who only survive when those exact patients fill their ivory towers. Not sure how anyone wins with those opposing forces in play.
Jawaralal_Schwartz

There’s a lot in this post, as usual, but I will have to decode, ponder, and possibly respond after a trip (to The Land of Socialized Medicine). But I must say, Dr. Rocky, you really have it in for cost cutters. I know a few of them, and what often repels those people, and more than a few patient/customers, are the salaries and benefits of employed care givers and their legions of administrators. Not people like you, the shrinking number in independent practices, but rather the poobahs and minions at big centers, often part of universities or other nonprofits. The compensation, coupled with job security, is a big step up for many of these individuals. But they can’t show they are more productive or more effective. They can demonstrate with considerable pride that they have patient/customers by the short hairs, and they’ll do everything to conceal prices, impede comparison shopping, and confuse with the Chargemaster and other near-criminal billing and coding strategies. We’re just a money target for them. The convergence of insurance interests with care provider interests is one of the most pernicious developments in American business and society.
DrRajHealth

Totally agree that true fee-for-service may offer the simplest way to achieve outcome goals of quality, price and accountability. What we suffer from currently is not true fee-for-service but rather a fragmented system where the financial structure is not aligned with value or accountability. So, we have introduced (and continue to introduce) “patches” to fix the non-alignment. The patches add complexity without evidence of effectiveness. Instead of following the KISS method we have chosen the “keep it complex” method.

You’re right, ACOs are an insurance instrument. As any insurance company the object is to collect premiums (in the case of ACOs, this is a global payment per covered life) and to not pay out claims. Indeed, any claims paid are considered a loss (referred to as the medical loss ratio, MLR).

There are nearly 800 total public and private ACOs in America with an approximate growth rate of 100 ACOs per year since 2011.

Contrary to popular assumptions global (capitated) payment systems may be more profitable than existing fee-for-service models. Similarly, a non-profit healthcare entity may be more “profitable” than a for-profit entity. I recall a comparative model (in the year 2012 as part of a finance course I took) which demonstrated that as the insurance payer mix approaches 80% federal source, capitated models out perform fee-for-service models. Of course, none of this directly speaks to quality, value or accountability.
SR

I agree that most of what’s happened here is inefficient and counterproductive so far. But even though you say what Canada, etc., do for physician visits are FFS, they are doing other things as well to help patients, especially those with ongoing problems. I’m impressed with what the Dutch are doing for Parkinson’s, for example, and a few organizations in the U.S. are following the example. http://www.parkinsonnet.info/ Almost all European countries use physical therapists to address pain and other acute problems and use drugs less often. And they use supply side rationing – 1/10th the number of ICU beds and dialysis capabilities. As one UK GP said to me, “We don’t ration dialysis – everyone who needs dialysis gets it.” The word that’s defined differently is “need”. When you look at UK vs. U.S. outcomes, ours are much worse because we give dialysis to many patients for only a few days – patients that don’t “need” it because they get no benefit from it. They die anyway.