Getty Images

More Physician Groups Lead Accountable Care Organizations

Physician groups are increasingly leading accountable care organizations, overtaking the number of hospital-led orgs by 2018. But this could signal a need for different policies, a new study shows.

There were more physician-led accountable care organizations (ACOs) than hospital-led ACOs by 2018, according to a study from Leavitt Partners.

Physician-led ACOs accounted for approximately 45 percent of all ACOs in 2018, whereas hospital-led ACOs represented just 25 percent and joint-led ACOs represented 30 percent, revealed the study recently published in The American Journal of Managed Care.

The percentages were notably different eight years prior when just 22 percent of ACOs were led by physician groups, the study found. That year, ACOs led by both a hospital system and a provider group dominated, accounting for 63 percent of the ACO market. Hospital-led ACOs accounted for just 16 percent.

Physician-led ACOs have become increasingly popular as the model matured and could become the dominant type of ACO within the next few years.

“There are both more new physician-led ACOs and a greater market potential than for those led by hospital systems, suggesting physician-led ACOs will continue to grow in importance,” explained lead author David Muhlestein, PhD. JD, chief strategy and chief research officer of Leavitt Partners.

The ACO is one of the most prevalent alternative care delivery and payment models out there, with over 1,588 public and private ACO contracts covering nearly 44 million lives according to the latest report from Leavitt Partners.

Per CMS, an ACO is a group of physicians, hospitals, and other healthcare providers who come together voluntarily to coordinate high-quality care for patients. One of the defining characteristics of the ACO model is that the group takes responsibility for the cost and quality of outcomes for a defined group of patients.

This shared risk helps an ACO achieve coordinated, high-quality care that leads to improved patient outcomes at lower costs, but it is the ACO’s organizational structure that determines how the group of providers gets to the standard of care, researchers stated.

Hospitals were best positioned to assume responsibility for costs and provide a high level of care when the model was first introduced after the implementation of the Affordable Care Act. Nearly all (8 of 10 participants) in the Physician Group Practice Demonstration – the precursor to the Medicare Shared Savings Program – were hospital-affiliated. The majority of participants also had experience with performance-based payment arrangements and prior access, or funding for, EHRs and other IT systems for tracking data, the study pointed out.

This led to ACO policies and strategies that were focused on building competencies for hospitals participating in the model. However, new data could change this outlook.

Physician groups increasingly led ACOs by 2018, but these groups could operate many more ACOs in the coming years as their market potential is significantly stronger than for hospital- or health system-led ACOs, the study found.

Recent healthcare merger and acquisition trends could result in physician groups large enough to enter accountable care contracts, and physician groups with at least 15 providers could potentially form an ACO, researchers explained.

Meanwhile, the ongoing consolidation among hospitals and health systems could decrease their market potential when larger groups or health systems combine. Health systems or independent hospitals that included short-term acute care hospitals could potentially form an ACO, researchers determined.

Therefore, as of December 2018, 28 percent of existing health systems or independent hospitals were participating in an ACO of the more than 1,700 hospitals or systems that could potentially form an ACO. In comparison, only 6 percent of the more than 8,200 physician groups that are large enough to potentially form an ACO have done so, the study found.

The move toward more physician-led ACOs could benefit the healthcare system, as physician-led ACOs have performed better at achieving savings and improving quality scores.

However, lack of capital for investments in sophisticated health IT systems, data analytics, and other capabilities necessary for coordinated care could be a disadvantage, researchers stated. Additionally, smaller physician groups may not be capable of assuming the level of financial risk policymakers are seeking from current ACOs.

“Because hospitals and health systems sponsored many early ACOs, the policies, payment models, and care delivery models initially focused on building competencies for these groups,” stated Muhlestein. “However, these policies and strategies may need to be reconsidered as the model moves forward to focus on ACOs led by physicians.”

Physician groups tend to have less experience with financial risk, less access to capital, lower overhead, and less-integrated EHRs, meaning key stakeholders need to account for these characteristics when forming ACO policy moving forward.

Muhlestein et al. advised policymakers to develop tools to evaluate physician-led ACOs and how vendors and ACO enablers or management partners support the organizations. Additional investments in peering learning communities and policies that favor ACO enablers may also help support physician-led ACOs, they said.

Finally, ACO policies should bolster and facilitate partnerships among physician-led ACOs and other organizations, the study concluded. Policymakers should identify barriers, such as healthcare fraud and abuse laws that prohibit or limit partnerships across organizations, to support physician-led ACOs.

Next Steps

Dig Deeper on Value-based care and reimbursement

xtelligent Health IT and EHR
xtelligent Patient Engagement
xtelligent Virtual Healthcare
Close