Health for life

ACOs and insurers discuss terms

The Disease Management Care Blog likes to think of itself as having achieved "critical mass." Now that its readership has climbed into the thousands (and Twitter is now well beyond 600), medical meeting organizers want to issue press credentials, medical journals are sending it embargoed previews and spammers are working particularly hard at getting maliciously-linked comments posted. The best upside for the DMCB, however, is its email correspondence with smart professionals who have insights that run contrary to the mainstreams confirmation bias.

Heres a gently edited email from one astute observer that the DMCB wanted to share:
 
While policymakers extoll the clinical integration virtues of ACOs and the PCMH, what goes unmentioned is that these vehicles often involve provider consolidation. While coordination of care and wasteful utilization might improve, does this mean that those entities could also amass considerable market leverage or become quasi-monopolies? Could that drive up costs?

I was at an specialty provider conference in early March where it was cited (in an admittedly unscientific member poll) that 25% of institutions surveyed had themselves been part of a consolidation or site of service change, mostly from community private practice to hospital-based setting. If physicians are not being employed outright, theyre entering into professional services agreements (PSAs).  Since this has to increase negotiating clout with insurers, the other locally competing providers are responding with an in-kind physician arms race.

Given this dynamic, what will happen when a system has a become a very efficient ACO and controls primary care with a locally dominant medical home network? Even if they fail to show any cost savings, will their ability to command favorable contracts be the key to economically surviving? Darwin would be proud of these long-beaked birds.

Are our federal and state governments prepared to reconcile the twin needs of integration and competition? I can’t help but think that regulators will be outmaneuvered by these increasingly powerful health care entities and that an unintended consequence of orm will be the increasing price points and the return of sticker-shock health care inflation.

Need an example of what is going on at the local level? Check out St. Lukes in Idaho and their ongoing battle with Trinity. St. Luke’s is a CMS designated ACO (on page 33) and is buying up assets left and right, employing physicians, and doing so in almost a direct anticompetitive way. I think that currently St. Lukes is doing a lot of forward thinking things, but if St. Luke prevails and Trinity does indeed go out of business as they state they will, it will leave a monopoly in that mostly rural state. When that happens, St. Lukes can set the price point.  Will they use that power to coordinate care or maximize revenue?

Believers in ACOs and the PCMH would do well to take a look at the Trinity perspective.