Doc-led ACOs could hurt hospital finances

The first class of 137 accountable care organizations saved $380 million in the first year, but could ACOs damage hospital finances in the long run?

Perhaps. Some of those savings are because ACOs excluded hospitals from their groups, Businessweek reported.

Physician practices lead more than half of the nation's 367 healthcare provider ACOs and leave out hospitals, according to the article. "Some had come with the hypothesis that those who formed ACOs … would be led by hospital-dominated systems," Jon Blum, principal deputy administrator at the Centers for Medicare & Medicaid Services, said in January, according to Businessweek. "Quite the opposite has happened."

Doctor-led ACOs keep costs down because they encourage their patients to use retail clinics or home visits for nonurgent care instead of expensive hospital visits. Healthier patients mean fewer hospital visits, which mean less money coming into those facilities.

"If we make people a whole lot healthier, they're not going to go to the hospital," Stephen Klasko, who took over at TJUH System--a hospital group affiliated with Thomas Jefferson University in Philadelphia--told Businessweek. "You're going to need 20 percent or 25 percent less hospital beds, which means 20 percent are going to close. If we're successful, the hospitals are going to get killed."

To combat this, some hospitals are expanding into the primary care market by buying doctors' practices. However, some doctor-led ACOs won't be bought. William Biggs, chief executive officer and medical director of the Amarillo Legacy Medical ACO in Texas, told Businessweek there's no need to partner with a hospital, because it won't lower costs or improve patient health.

To learn more:
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