3 Biggest Obstacles for ACO Structures: Capital, Engagement & Leadership

Partnerships between physicians and hospitals that stem from accountable care organizations present new administrative and legal challenges for the healthcare industry.

Sidney Welch, JD, a partner with Arnall Golden Gregory LLP's healthcare practice and an attorney who works with physician practices on the cusp of committing to ACOs, discusses essential considerations for physicians entering into ACOs, as well as structural concerns physicians and hospitals should be aware of when entering an ACO agreement.

Advice for physician practices joining ACOs

1. Do the necessary research and prep work. One of the first things Ms. Welch tells physician practices interested in forming or joining an ACO: do your homework and due diligence. This involves asking a few basic questions of the ACO.

  • What are the objectives of the ACO?
  • What are the physicians looking to get out of it?
  • How does physician expectation match what the ACO can actually offer?
  • What's the likelihood all the ACO's objectives will be met?

After answering those questions, physician practices can consider other structural matters regarding the ACO's makeup and functionality.

2. Participate in negotiating the terms of the ACO. Physicians and hospitals need to consider the terms of participation in the ACO, paying special attention to money and governance. Ms. Welch says like other legal structures, an ACO, aside from striving to provide quality care at a reduced cost, boils down to money and control.

She recommends hospital-driven ACOs consider how to get physicians to participate in a productive way, taking extra care when setting up the terms of the ACO's governance. There needs to be enough physician leadership in place to ensure substantial clinical integration, and physicians need to be on board for the clinical component of the ACO to be successful.

"If the ultimate idea of ACOs and medical homes is to deliver collaborative care, then clinicians, as much as administrators, need to be at the table to problem solve. If one or the other has carries too much weight, the end product — accountable care — will not work."

Further, shared saving agreements in commercial ACOs need to be fairly distributed among hospitals and physicians.

"It's not called shared savings for nothing," Ms. Welch says. "To be successful and motivate, ACOs need to get to a point where physicians and hospitals are equally sharing savings."

3. Consider the ACO's marketplace. In some marketplaces, ACOs may be a better solution than in others, Ms. Welch says. Many ACOs are "marketplace-driven," meaning they stem from a demand to provide more efficient, long-term care for a patient population in a defined location.

ACOs thrive in areas with an existing integrated care model in place. For example, there may be individual practice associations or physician hospital organizations in place in a given market with components that can be transferred over to a new ACO agreement.

Ms. Welch says that physicians and hospitals forming ACO agreements need to draw from managed care lessons learned in the 1990s and understand that healthcare is in many ways localized. "What worked in California didn't necessarily work in Georgia and other jurisdictions," she says.

Roadblocks when organizing an ACO

Ms. Welch points out several barriers to ACO entry physician groups need to be aware of before organizing. It's important for hospitals to also consider these potential roadblocks to ACO agreements.

1. Access to capital. This is of particular concern to physician-led ACOs and is why many commercial ACOs are hospital-driven, Ms. Welch says.

2. Physician engagement. Some physicians may accept an ACO agreement because such set-ups are "the new rage," but the deeper question is whether these medical professional really want to invest the time, effort and, in some cases, money to form an organization, says Ms. Welch.

3. Establishing successful leadership strategies. There needs to be an identified leadership strategy in an ACO. But the concern is that physicians may not raise their hands to take on the added responsibility of helping lead a hospital-driven ACO, according to Ms. Welch.


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