How ACO agreements can affect hospital labor relations

The proliferation of accountable care organizations (ACOs) in the healthcare industry may have a number of unintended consequences for labor relations, Becker's Hospital Review reports.

ACOs and other similar collaborative agreements can have two major ramifications for hospitals, labor attorney Michael Moschel told Becker's:

Interfering with employment: Risk-bearing ACO agreements, which financially incentivize performance, could lead one member of the ACO to put pressure on another to fire an underperforming employee, according to Moschel. "Given the strong financial incentive for ACOs to work, I can't imagine there's not going to be pressure put on groups to deal with underperforming doctors," he said.

However, hospitals that engage in this kind of employment interference could open themselves up to contract interference lawsuits or discrimination claims, Moschel told Becker's. "What happens when an employee gets disgruntled and wants to sue? They look for the deepest pockets," Moschel said--which, in most cases, is the hospital.

To safeguard against such scenarios, Moschel suggested that hospitals clearly define performance metrics from the outset, and make sure their agreements with physician groups have strong indemnification provisions.

Tension with unions: ACO arrangements may transfer work from unionized hospital employees to a new affiliate, according to the article. "Be mindful of collective bargaining agreements and make sure ACOs are set up and administered in such a way that you're in full compliance with those agreements," Moschel told Becker's.

To avoid these complications, he recommends that hospitals involve human resources while planning the ACO. "It's seen as a business deal, and [hospitals] forget about including labor relations and HR people," he said.

Despite their initial popularity, ACO growth has declined this year, with only 35 new ones announced since January 2013, FierceHealthcare previously reported.

To learn more:
- read the Becker's article

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