ACO and Insurance Company Ownership

In my last blog I discussed some of the basic tenants of what an Accountable Care Organization (ACO) is all about.  So now that you are up to speed, I'd like to now talk more about how insurance companies work with the ACO model and why that topic is relevant to the national healthcare discussion.

• To date, most people in the PT world that know anything about ACO's probably have taken the position, "Isn't that what Kaiser is all about?  But they are their own thing, not competing for my PPO or Medicare business, so who cares?"  Well, Given that Kaiser Permanente has figured out how to make a profit on servicing 6.7 million enrollees, maybe we should.   Other insurance companies are starting to get it, but more on that in a minute.   Regarding ACO structure, the Integrated Healthcare Association points out that the most successful ACO in California is Kaiser Permanente,

"where there is an exclusive relationship between the insurer and its medical groups and, in most regions, with its own hospitals.  Some thought leaders consider vertical integration with an insurance provider to be core to the success of this ACO...."

• That's right, everyone is on the same team: The hospital, the doctors, and the insurance company.  (Start making your cries about socialized medicine now, it might be closer than you think in some regions!)  Imagine that, all the players with the same goal; control services to make a profit while providing adequate enough care to keep new customers rolling in.  If you think I'm stretching this idea, then check out this piece from June 2011 in The Washington Post: http://www.washingtonpost.com/insurers-quietly-gaining-control-of-doctors-covered-by-companies-plans/2011/06/29/AG5DNftH_story.html.  The article points out how insurance companies are quietly purchasing medical groups.  Why you ask?  Can you think of a better way for an insurer to control costs than to control the providers that see their members?  "Oh, you don't want to streamline your care and help us save on the bottom line?  We aren't going to kick you out of our network, we are going to FIRE YOU."  Has a nice ring to it, doesn't it?  "Now go treat some patients!"
• So if you are an insurance company and you want to have the most bang for your buck regarding control, where would you turn?  Wouldn't you try to purchase as many services as possible?  In doing so, you'd have better control of the entire healthcare ship (that includes ancillary services, which is where the high and mighty PT profession stands in this grand discussion).  Enter: ACO structure.  You have a nice and neat working community with all the services under one managed umbrella.  It then comes down to grabbing enough market share in an area, controlling costs well enough to keep premiums down so you can attract new enrollees, and slowly you start to take over the market in that area.  
• Would joining a Kaiser system (as a patient) be that bad if the majority of your doctors worked in that system?  Wouldn't that take out the need to have infinite choice as a consumer and make the HMO you are looking at more attractive, especially if it were cheaper and had a much more solid cap on your maximum out of pocket expenses?  (Oh, and what if there were also a way to see those few doctors out of network by paying a little more out of pocket for their services?  See more in my next Blog on how that can be done.)
• Hopefully by now you are beginning to see how big the players are in this equation and how the PT victory of AB 783 could really mean next to nothing in the grand scheme of things if these types of groups start to form across the state.  If you still aren't putting the pieces together, know that these groups are going to have their own PT groups.  If the ones they have aren't adequate, they could very well build satellite clinics to meet their needs.  The only reason they'd need to contract out to an independent PT clinic would be if it made financial sense to have them provide service to a zip code outside the spheres of their primary locations.  So for those of you about to cry, "that's not fair!  What about national anti-trust laws, can't they help us?"  The ACO model is Stark exempt, so they can refer to themselves as much as they want and nobody can cry foul (this is because the ACO model removes the entire concept of referral for profit.  Both the doctor and the PT want the patient out in the fewest visits possible to control costs and make the group more profitable.  There is no inherent reason to regulate over utilization in a capitated system).  
• So toss this thought around a little bit longer, all the players on the same team: doctors, hospitals, insurer, ancillary services.... the real question is, will your clinic even be on the field?  
• My next post will discuss how ACO's that aren't partnered directly with a single insurer can still turn your lights out.