How provider-based ACOs can empower PCPs

A Law Review Q&A

Primary care physicians (PCPs) around the country are facing the largest decision of their lives: to remain independent and possibly form an accountable care organization (ACO) with other independent physicians, or become an employee of a hospital or health system.

Data published in JAMA this summer shows that while most of the early ACOs in the Medicare Shared Savings Program (MSSP) were provider-led, there are now more physician-led ACOs than provider-based ones, and they are finding much success through physician empowerment.

We spoke with Bo Bobbitt of Smith Anderson to discuss how provider-based ACOs can prove to be the better ACO model by better leveraging their PCPs.

What implications should providers draw from the JAMA findings this past summer? What pressures are PCPs feeling?

The main takeaway for providers is that PCPs are starting to consider alternatives to hospital employment. The transition from fee-for-service to value-based care is accelerating, and physicians are the drivers of success.

However, many physicians signed volume-only physician work relative value unit compensation formulas in their hospital employment agreements, with no incentive payments for value. They have not been involved as partners, much less leaders, in any ACO planning. Even though the fee-for-service days are waning and strains are showing for many providers that are not adapting, the pace of preparedness for the accountable care era has been disappointing for many employed physicians.

Tired of being overworked, unsatisfied, and overwhelmed with growing regulatory requirements, many PCPs have sought the security and strength of hospital employment.

However, PCPs are increasingly missing their autonomy and feeling out of their comfort zones, and disengagement has spurred disinterest in hospital employment. Only 7% of PCPs are interested in shifting from fee-for-service to value-based care, signifying a gaping disconnect between PCPs and providers regarding their roles in leading health care delivery and controlling costs.

For providers, being unprepared is simply not an option. If providers are going to participate in the MSSP, then they need to do it like they mean it and not be on the fence about the value-based care.

How can provider-based ACOs work toward outpacing physician-led ACOs?

Empowering PCPs is the key to outpacing physician-led ACOs. Where physician-led ACOs excel over provider-based ones is in leveraging the "CEO power" of PCPs. Even though most PCPs may not realize it, they each can be seen as a CEO in charge of bringing in approximately $10 million in annual revenue.

But when providers consider that primary care only receives 5% of that yet controls much of the average of $5,000 in annual spending of their 2,000 or so patients, it’s easy to see why PCPs are feeling a little frustrated and unappreciated. To better remedy this situation, providers need to distribute incentive payments to PCPs based on contribution, as well as respect and appreciate the good work being done on PCPs’ end.

Independent PCPs also say that the pressures to invest in technology. To continue to lure PCPs to employment, providers must continue to invest in and leverage health care IT (HIT). HIT is essential for modern health care delivery—from clinical care to billing and coding, HIT is a costly requirement for all ACOs.

Providers have a tremendous opportunity to succeed in this new value-based paradigm, but they must better leverage their PCPs to drive value to survive in the long run.

Do you see the trend of physician-led ACOs outpacing provider-based ACOs continuing? In your opinion, which is the better model for long-term success?

It will be certainly be interesting to which model prevails as the “best” during this transition toward value-based care.

On one hand, physicians are increasingly missing their sense of independence, and widespread physician employment has led to net cost increases. On the other hand, risk averse PCPs are only going to be so entrepreneurial, and there is still a strong agreement among many of them that the provider setting is as a more secure place to work. The real challenge for both types of ACOs is capitalizing on the JAMA findings before the other considering how significant empowered PCPs are in driving value-based care.

PCPs often become employed by provider-based ACOs for defensive reasons, but that could change if provider-based ACOs become the best value-based care platform because of ongoing physician engagement efforts. Overall, if providers are willing to right-size and truly commit to value, the provider-based ACO can be the most successful model.

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