Last year, hospital-run ACOs outnumbered physician-led ACOs, but this year, the opposite is true, creating opportunities for pathologists and clinical laboratories

Until recently, the popular wisdom was that hospitals and health systems would tend to play dominant roles in most accountable care organizations (ACOs). However, new data shows that physicians are holding their own in the formation and management of ACOs.

This is an auspicious development for local clinical laboratories and pathology groups. Physician-run ACOs are much more likely to consider using an independent medical laboratory provider.

Steady Growth in Number of Physician-Run ACOs

The general belief was that ACOs anchored by hospitals and health systems would be the most common type of ACO. That may not prove to be the case. Earlier this year, the federal Centers for Medicare & Medicaid Services (CMS) approved new applications for both physician-run and hospital-run ACOs.

Following this action, the number of physician-run ACOs now exceeds the number of hospital-run ACOs, according to an article, “More Docs Joining Forces in ACOs,” that was published in MedPage Today. This is good news because physician-run ACOs will need clinical laboratories and pathology groups as participants, if not partners.

Last year, hospital-run Medicare ACOs outnumbered their physician-run counterparts by 91 to 45, according to an analysis by Neil Kirschner, Ph.D., Senior Associate of Regulatory and Insurer Affairs for the American College of Physicians (ACP). This spring, however, Kirschner reported that, after CMS approved new applications for ACOs, that ratio had changed. Physician-led organizations now outnumber those run by hospitals by 202 to 189, MedPage Today reported.

Hospital-Led ACOs Prefer Their Clinical Labs Serve the ACO

Hospital-run ACOs typically have their own in-house clinical laboratories. These ACOs are, therefore, more likely to exclude other medical laboratories or pathology groups that would seek to contract with the hospital-run ACO.

Paul B. Ginsburg, Ph.D., is President of the Center for Studying Health System Change. He believes that physician-led ACOs have the potential to make local healthcare markets more competitive. This is auspicious for local clinical laboratories and pathology groups, since a more competitive local market would provide more opportunities for local lab organizations to provide medical laboratory testing services to these physician-led ACOs. (Photo Copyright, Center for Studying Health System Change.)

For physician-run ACOs, the opposite may be true. Thus, physician groups forming ACOs may want to continue to work with their existing clinical laboratory and anatomic pathology providers. They may also be open to considering a new laboratory as a provider or partner for their ACOs.

For clinical laboratories, the downside of contracting with physician-run ACOs is that they typically serve fewer patients than hospital-led ACOs serve, noted MedPage Today. But the advantage of contracting with physician-led ACOs is that they are likely to create more competition in those markets where large hospitals and health systems dominate, MedPage Today reported.

Paul B. Ginsburg, Ph.D., President of the Center for Studying Health System Change, said, “I think physician-led ACOs inherently make markets more competitive because they have an opportunity to shift patients toward higher-value hospitals.” In a market where large hospitals or health systems dominate, a physician-led ACO could force those hospitals to compete, he added.

Better at Controlling Costs

Also, physician-led ACOs may be more successful at controlling costs. This is because physicians can treat patients in their offices whenever possible, thus keeping them out of the hospital. Conversely, hospital-led ACOs may be reluctant to put tight controls on emergency-department use and inpatient stays, MedPage Today reported.

In some markets, physicians starting ACOs may find willing partners among health insurers, according to an article published in Medical Economics. For physician-led ACOs, Cigna, the large national insurer based in Bloomfield, Connecticut, provides lists of patients admitted to the hospital, identification of gaps in care, performance reports, and assistance with patient care-management.

Modern Healthcare reported on two examples of physician-led ACOs that have a history of success. One is the Greater Rochester Independent Practice Association (GRIPA), in Rochester, New York. This IPA formed an accountable care partnership with Excellus BlueCross BlueShield, also in Rochester.

Incentives for Quality Improvement and Shared Savings

GRIPA operates like a Medicare ACO and has incentives for quality improvement and shared savings. This year, GRIPA’s Medicare ACO is providing care to 110,000 patients, Modern Healthcare reported.

The second example comes from the Kelsey-Seybold Medical Clinic, a 370-physician multispecialty group in Houston, Texas. Kelsey-Seybold was the first accountable care program to be accredited by the National Committee for Quality Assurance. In 2007, the clinic formed an ACO with Cigna. Under this program the clinic worked to lower healthcare costs by providing more services to prevent illness and coordinate care.

Reduction in Number of Catastrophic Health Claims

Kelsey-Seybold reported spending 15% to 30% less than comparable plans spend on patient care. Most of the savings came from managing what otherwise would have been catastrophic health claims of more than $50,000, noted Modern Healthcare in its story. After this program with Cigna, Modern Healthcare said that the Kelsey-Seybold Medical Clinic is now contracting to work with self-insured employers in Texas.

These examples show that physician-run ACOs are delivering outcomes comparable to hospital-run ACOs. As a consequence, there may be some interesting competitive battles in cities where strong physician-run ACOs can challenge ACOs operated by the region’s largest hospitals or health systems. What is yet to be determined is how both types of ACOs leverage medical laboratory testing to advance patient care, while reining in the cost of care.

—By Joseph Burns

Related Information:

Collaborating on healthcare: Insurers, physicians see value in partnerships

Physicians are building their own ACOs

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