Should Health Care Still
Revolve Around Hospitals,
or Accountable Care
Organizations?
Deloitte Debates
New options for physician alignment and care delivery – such as Accountable Care Organizations (ACOs) – offer the
prospect of more efficiency, better outcomes and higher revenues. But they carry new costs as well – and could upset
traditional roles. Is realignment worth it?
It’s difficult to have a conversation about health care changes without hearing about ACOs – Accountable Care
Organizations. Starting in 2012, ACOs may contract with Medicare under the federal reform law. But ACOs are only
one possible model for the alignment that determines how doctors and hospitals work together. The bigger question is
whether hospitals will maintain their historic place at the center of health care delivery and what role they should play
in creating new structures. Should you take the lead in reinventing physician alignment? Or should you stand behind the
facility-based model?
Here's the debate:
Physician-driven alignment can deliver better health
outcomes.
Integrated health delivery organizations generally make
better use of information technology and data-sharing.
This can lead to better, quicker diagnoses and more
effective care plans.
Stick with traditional roles and autonomy.
Viewed one way, realignment has the potential
to take both hospitals and doctors down a peg. A
decentralized system may rely less on hospitals and it
may also impose group standards on physicians who
value their clinical autonomy.
It’s more important to focus on efficiency.
We’ve heard the stories – or even lived them. The test
done three times. The new diagnosis for a long-time
chronic ailment. When the different players in a care
delivery system are on the same page, this typically
doesn’t happen.
It’s more important to avoid new infrastructure
costs.
Today, health organizations make investments only
when they feel they can. But integrated systems
depend on significant investments in IT. If you’re
thinking HITECH funding will cover you, you may be
surprised by how little it helps.
This is how to make more money.
Today, hospitals derive revenue from acute care.
Physicians earn money from preventive or routine
interventions. A system that plans and delivers the
full continuum of care can capture – and share – the
revenue.
Don’t subsidize other participants in the system.
Integrated systems have higher direct and fixed costs
than traditional fragmented systems. That tends to
force problematic cross-subsidization as money moves
from acute care centers to primary care, internists,
allied professionals and others.
This is the fast lane to implementing reform.
It’s no coincidence that physician-centered realignment
is emerging now. It goes hand-in-hand with outcomebased care, cost containment and anticipated increases
in non-acute patient volume. Can the old model get you
where you need to go?
It’s full of speed bumps.
There’s enough change under way already without the
additional disruption you may incur if you turn your
service delivery model and professional relationships
upside-down – a step no one’s requiring you to take.
My take
Paul H. Keckley, Ph.D.
Executive Director, Deloitte Center for Health Solutions,
part of Deloitte LLP
Physician-hospital alignment is disruptive. And imperative.
It’s impossible to ignore the Patient Protection and Affordable Care Act, but look beyond it. Look beyond what you’re
hearing about Accountable Care Organizations, too. Two other forces are prompting significant change that would likely
still be gaining traction today despite legislated changes to health care: clinical innovation and unsustainable health care
costs.
Because health care is so large a portion of the nation’s economy, no real recovery is likely without medical cost control. In
my conversations with hospital leaders around the country, that’s consistently the first thing we talk about. Clinical matters
come second. Only after that do we talk about changes in the law.
Realigning the delivery of care away from a hospital-centric, intervention-based model is consistent with both of these
change engines. It’s responsive to the way clinical practice is evolving and it offers a chance to improve efficiency and
reduce the cost per outcome. For hospitals, the question isn’t whether to embrace new models of physician alignment,
but how.
If I were a hospital administrator, I’d prioritize three goals: radical cost reduction, reducing and re-prioritizing capital
obligations and integrating with physicians via risk-based contracts. That’s not the complete to-do list, but it will help pave
the way for other changes to follow.
Whatever its benefits, realignment does run afoul of some entrenched ways of thinking. For doctors, a shared system of
responsibility spells the end of their autonomy. For hospitals, their central roles will move closer to the margin as primary
and low-intensity care goes on without them. But resistance to change doesn’t justify the status quo.
Deloitte Debate
2
Related Content
Library: Deloitte Debates
Services: Consulting
Overview: Health Care Reform & Government
Related links:
Accountable Care Organizations: A New Model for Sustainable Innovation
Review research that examines the features, challenges and potential of ACOs.
The Center for Health Solutions
Learn more about the Center.
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