Even as accountable care organizations sprout up around the country, plenty of questions remain. What will ACOs look like? Who will manage them? How much cost savings, if any, will they produce. Perhaps the only thing about ACOs that everybody can agree on is they must be provider-driven.
Well, almost everybody.
Wayne Smith, president and CEO of Nashville, Tenn.-based Community Health Systems, raised eyebrows earlier this month when he told a hometown crowd of healthcare industry executives that support for ACOs is dying out and the model is more of an insurance product than anything.
Smith argued it's the insurance companies that like ACOs, because they're essentially another form of capitation. Providers like CHS, with its 133 hospitals in 29 states, have to be very careful about taking on that kind of financial risk, he said.
As far as I know, we don't all employ actuaries, Smith said.
The we in that statement is Nashville's investor-owned healthcare industry. More than 250 healthcare companies call the city home, including 17 publicly traded companies with combined employment of nearly 390,000 and more than $60 billion in global revenue (Nashville Health Care Council). More than 430 acute-care hospitals nationwide are owned, operated or leased by Nashville-based companies, including the granddaddy of them all: HCA.
That's not to say that every for-profit health system shares Smith's views on ACOs. But consider this: Nearly all of the ACOs that have been announced or launched to date involve nonprofit health systems or academic medical centers with large, integrated physician groups. (A notable exception is Detroit Medical Center, a Pioneer ACO owned by Nashville-based Vanguard Health Systems.) ACOs also are location-based, encompassing a patient population that receives healthcare services from a defined group of providers hailing from a given geographic area.
Investor-owned hospitals, on the other hand, are sprinkled throughout the country and oftentimes are the sole provider in the community where they are located. And while they share a corporate structure with collective administrative and purchasing power, that doesn't necessarily translate to common clinical guidelines and coordination of care. Both are crucial elements of new payment models coming down the pike that base compensation on quality of patient care, not quantity of services provided.
So perhaps it should come as no surprise that CHS is pulling together eight of its hospitals in northeast Pennsylvania in a new network called Commonwealth Health. Affiliates of the network include InterMountain Medical Group and Physicians Health Alliance, two multispecialty groups with more than 100 physicians, as well as five home health and hospice agencies. CHS has been mum on the details, but the move is clearly designed to help the hospitals compete with nonprofit Geisinger Health System, whose integrated delivery system is considered a model for ACOs.
In the end, CHS top leadership may not agree with ACOs, but the company appears to be positioning itself and its hospitals to play along. Other investor-owned health systems likely will follow suit. They'll be forced to if they want to survive in the post-reform era.
But we all know the most successful movements start from the inside, with participants who believe in the cause. And driving providers to participate in ACOs is not the same as creating ACOs that are provider-driven. Just ask the nation's second-largest hospital company.