Editor's Note: Thomas M. Priselac, President and CEO of Cedars-Sinai Health System in Los Angeles, is guest blogging today.
Much of the current discussion about Accountable Care Organizations focuses on the horse-race aspect: Will hospitals be the real winners at the expense of physicians? Or vice versa? Will consolidation hurt smaller hospitals and independent physicians? Who will really be steering the car and who will be relegated to complaining from the back seat?
Indeed, the conventional wisdom currently fashionable in the discussion on ACOs is based on a presumption that ACOs will be built around either physician interest or hospital interest. By framing the discussion narrowly, the focus has been on the form of the ACO physician/hospital relationship rather than its function. In medical terms, it's akin to focusing only on the anatomy of an ACO rather than its physiology.
The typical assumption is that hospitals and physicians would each seek governance control to optimize one's success at the expense of the other. Sadly, there may well be scenarios of that type which emerge. However, the extent to which that point of view forms the basis for ACO development by either party will have a significant negative impact on the ACO's effectiveness and longevity.
That perspective ignores two of the fundamental reasons for forming ACOs: One is to develop organized systems of care that have the capacity to meet the challenges of creating a more cost-effective, high-quality care health care system which also contributes to a healthier population; The second is to transform the delivery system in a way that better matches available healthcare resources—both human and facility—across the care continuum, ensuring that the needs of the community are served. With those goals in mind, the most enduring new ACOs (or, for that matter, any delivery system of the future) will be those that recognize their obligation to work simultaneously to serve both the interests of individual patients and the broader community in which they operate.
In order to function appropriately, the ACO governance structure (the "anatomy") should reflect sound principles used in nonprofit entities and in the business sector, such as the appropriate mix of skills at the management and governance level to thrive in a risk-based payment environment, the relative capitalization of the ACO by the parties and relevant legal considerations.
But, more important than this anatomical structure of the ACO, enduring success will be determined by the operating philosophy and governance policies (the "physiology") of the ACO. These must be designed to create a partnership between physicians and hospitals (and other stakeholders) that reflects mutual respect, trust and dependence.
Physicians must provide the clinical leadership and decision-making in matters of medical practice in a manner consistent with recognized national standards of care or, in the absence of national standards, the creation of rational local standards. Others in the governance structure must bring the skills, expertise and resources to facilitate the translation of physician's expertise and knowledge into the effective provision of care at the individual patient level.
As well, the ACO governance must function in a manner to meet both its internal obligations and external obligations. The former includes the availability of facilities, services and systems to meet the ACO's own needs to provide cost effective quality care to the patients for which it is responsible. The latter includes the ACO's obligations to assure the adequate availability of facilities and services to meet the needs of the larger community in which it and other ACOs operate, as well as assuring the adequate supply of essential community and public-interest resources like emergency and trauma services, health professional education and medical research.
As with any living thing, successful ACO development will be determined by a healthy organizational physiology functioning within an appropriate anatomical structure.