Putting accountability into accountable care organizations

At a summit about ACOs in Los Angeles last month, there was a lot of discussion of generalities and few specifics. Peter Lee, the Director of Delivery System Reform for the Department of Health and Human Services used the phrase "good question" so many times that it became a nervous joke.

This isn't a surprise: initial regulations on ACOs won't be released by the federal government until 2012. As a result, most healthcare gurus are groping around when it comes to ACO construction, operations and goals.

Meanwhile, the hunger for concrete information is growing. There seems to be a budding consensus that ACOs are going to be a healthcare delivery hub for decades to come, and everyone wants to know what form they are going to take.

A recent study by Harvard researchers should give the nation's ACO meisters a more laser-like focus. They sifted through the records of nearly 2,400 inpatient admissions at 10 hospitals in North Carolina between 2002 and 2007. More than 18 percent of the patients were exposed to medical errors, of which nearly two-thirds were preventable. Patients died in more than 2 percent of the cases.

In other words, little has changed since the landmark "To Err is Human" study of a decade ago, which determined nearly 100,000 people died every year due to medical errors. Another alarming bit of information: the Tar Heel State was the focus of this study because its hospitals have made patient safety a priority.

Given that a single error can cost a hospital hundreds of thousands of dollars, it would be a good idea for the ACO gods to obsess less about payment bundling and corporate structure and simply zero in on quality. Reducing errors by 80 percent or so would go a long way toward slashing the outsized amounts of money spent on healthcare delivery in this country.

To that end, I would like to provide three simple guidelines that the tens of thousands of hospital, health plan and medical group executives, physicians and lawyers currently obsessing about ACO construction can use as a blueprint for moving forward:

Take a cue from the auto industry and empower everyone. Any employee of an Asian automaker can stop the production line whenever they spot an assembly error to fix it on the spot. American automakers mostly lived with the error and fixed it after the whole car was put together. Any worker out of step with this policy was fired. It was a disastrous procrastination that no doubt helped make Detroit the metropolis that it is today.

The Asian approach to automobile construction would work in a hospital. Reports on sentinel events share two common themes--horrible errors and banal causation. The retractor, surgical sponge or drill bit isn't left in the patient because his caregivers are reckless or stupid. It happened because the OR nurse was assigned to a new surgeon who worked so fast she was intimidated by his brusque speed, or a surgical technician thought the sponge bag looked light but was scared to speak up. When the $50,000 a year healthcare grunt is given an opportunity to halt the work of a $800,000-a-year alpha orthopedic surgeon without penalty (and perhaps even earn a bonus to boot), a lot more patients will take home a lot fewer unwanted souvenirs.

Rethink hospital executive compensation. Cedars-Sinai Medical Center in Los Angeles made national headlines in recent years for two reasons: the newborn twins of actor Dennis Quaid were overdosed with a blood thinning drug that almost killed them, and more than 200 patients accidentally received massive amounts of radiation due to badly calibrated CT scanners.

What didn't make the headlines is that hospital CEO Thomas Priselac continued to rake in nearly $3 million a year in compensation despite these problems. Like most hospital CEOs, he's paid based on his hospital's financial rather than holistic performance.

But what if ACO regulations required that one sentinel event in a calendar year cut the incentive pay of the hospital's executive staff by 50 pecent, and two eliminated it altogether? Base pay would take hits after three or more events. A lot more hospital executives would be walking the floors of their institutions, checking on the equipment themselves. This would also send a message to their employees to pay more attention.

No medical malpractice caps for employed physicians. Many healthcare organizations are discussing foundation models to directly employ physicians, a model perceived to provide more financial security to badly needed clinicians while also cutting costs.

However, such an entity will also blunt the legal recourse of patients harmed by medical errors.

Why is that? Many states cap non-economic damages for a plaintiff when suing a physician for malpractice. It's a notion wholeheartedly embraced by conservatives (who love protecting economic elites like surgeons, suspect any maimed patient of malingering and want to discourage trial lawyers from taking on their cases). Damage caps will only gain steam if doctors align themselves with large businesses.

The malpractice conundrum is particularly egregious in my home state of California, where the $250,000 cap for pain and suffering hasn't budged in 35 years. That means a jury award for the maximum amount is worth about one-third of what it was in the 1970s. A hospital or healthcare system staring down a potential judgment for that amount would laugh it off. They won't laugh if it's for millions of dollars. It will also force them to examine their processes much more clearly.

These are just a few of my modest proposals for ACOs. Dr. Berwick, Secretary Sebelius and the industry's other movers and shakers are free to use them without charge.

Of course, if they want to write me a modest check, they may do so as well. It will no doubt cost them and their colleagues a lot less than the labyrinth of regulations that are likely to be produced and scrutinized for years on end, as well as the need to say "good question" until they're hoarse. - Ron

Note: An earlier version of this article attributed the "good question" comment to another speaker at the conference. I sincerely regret the error.