Getting Past The Initial Buzz On ACOs Relationships Will Differentiate What Works And Fails

Payers & Providers 08.11.2011

By Pearson Talbert

Accountable care organization (or ACO). You need to go back 30 years to DRG (followed quickly by PPO and HMO) to find a three-letter acronym that has ignited as much buzz. At present only a handful of “trial” accountable care organizations have emerged, yet we already know three irrefutable truths.

The first is that ACOs will elevate competition to a level many communities have never seen. That’s because as hospitals work to align themselves with physicians, their competitors are doing the same. More than ever, winners and losers will emerge, necessitating hospitals to be more aggressive, more strategic and more open than ever before to taking calculated risk.

A second truth is that ACOs are likely to spawn a new era of cost shifting. This concept is not new to healthcare; those who could pay have always fronted the burden for those who couldn’t. But as hospitals become accountable for the care of an entire community, it will be even more important to have a strategy in place to attract favorably insured consumers. That brings us to the most important truth of all.

ACOs are about relationships. Looking at the nation’s most successful integrated healthcare systems – Geisinger, Inova Health, Kaiser – it is clear that for ACOs to succeed, hospitals and physicians must align their incentives and establish a relationship built on trust – one where “win-win” becomes more than a cliché.While many hospitals already have a physician relationship management­program in place, few are achieving significant impact. That is because instead of seeking opportunities for strategic alignment and on going engagement, these programs are often built around outdated “meet-and-greet” activities or simply address quick fixes such as more convenient block times in the operating room.

According to a survey by the American­College of Physician Executives, only 16 percent of ACPE members rated the relationship between hospitals and PCPs as “doing well.” That is a frightening and untenable statistic. One of the most effective ways to bridge this gap, according to the ACPE survey, is to implement a formal physician relationship management program. When optimally planned and executed, such a program can create three critically-important alignments.

Referral Alignment – By working with PCPs to uncover barriers and help foster connections with specialists, hospitals can facilitate a steadier flow of patients. Referral alignment also helps identify challenges physicians may be having with accessing and delivering services at the hospital.

Strategic Alignment – While most hospitals have a loyal group of admitting physicians, often the majority are “splitting” referrals between several hospitals. There are also likely physicians in the community who have chosen not to join the medical­staff at all. Strategic alignment helps educate physicians about the benefits of associating with the hospital and invites them to be part of the decision-making process, which can translate into increased personal and professional satisfaction.

Economic Alignment – Like hospitals, most physicians have seen their income decrease as reimbursement declines. Many doctors are looking for new ways to grow their income, such as through joint ventures or adding new services. Hospitals can help identify gaps in services within the community and, where appropriate and allowable, partner with physicians to fill those voids and foster market share growth.Today, more than ever, hospitals need to enact a physician relationship management program that identifies potential growth markets, targets physicians most likely to drive new referrals, and addresses a physician’s core needs and professional goals. Only through this data driven approach can hospitals and physicians achieve the kind of competitive advantage needed to win in the world of ACOs

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