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Hospitals: "More Pay, Less Risk Please!"

Leave it to hospitals to tell their biggest customer how to run its business.

Let me set the stage: As a high-volume purchaser of health care, Medicare is the hospital industry’s CUSTOMER. Hospitals are little more than mostly interchangeable, price-taking SUPPLIERS. Why is that important?

Predictably (now that reimbursement is at stake) hospitals have pushed back against Medicare’s ACO rules. Too risky, too prescriptive, too little uncertain benefit for too much expensive work, say the hospitals.

Now I can think of dozens of improvements to the ACO concept, things I would’ve done differently or in a less-clumsy way. Mysteriously, the Feds didn’t consult me (!) but now they’re holding firm to their rules, as they should.

It’s their money, after all.

And the message is clear: ACOs are not for everybody, not now, maybe not ever.   Like it? Fine. Don’t like it? Go play in someone else’s sandbox.

I call that clarity.

Hospitals, meanwhile, are acting betrayed.

“Darn customers! We had ‘em where we wanted ‘em and the little ingrates quit doing what we told ‘em to do!”

Personally, I think if you build an ACO-like organization you’ll find plenty of profitable ways to take it to market.

Let’s see. Who besides Medicare might be interested in higher-quality, customer-pleasing care at lower prices? Show of hands?  Anybody?

Try commercial payers, self-funded employers and union plans, occupational medicine networks, even your own employee health plan (an excellent place to start, by the way.)

Heck, why not keep all that newly-created value yourself?  Find someone with an insurance license to rent and create your own health plan. It’s actually quite simple (except for all the pesky changes in incentives and attitudes!)

The takeaway: I know complaining is more fun than real work, but there are many flavors of customers out there, all welcoming new business models, all offering the potential of new revenue streams.

Stop trying to tell Medicare how to run ITS business and go build YOURS!

More thoughts, here, from Paul Ginsburg, Ph.D., writing in the NEJM:
"Although many comments may help point the way for the agency to achieve its triple aim in a more workable manner, CMS shouldn’t be too quick to lower the ACO bar too far: the initial ACO opportunity should not be for everybody."
Ginsburg also notes that, given the imperative toward value-based purchasing and the need to build new organizations and processes, it might be better to take the risk and get paid SOMETHING rather than defer the day of reckoning until it's too late.

Still not persuaded?  I don't blame you.  Maybe a 90-minute HealthLeaders Media Council webcast will help:

"Join HealthLeaders Media for this 90-minute Webcast, including Q&A, for a deep dive with leading experts savvy on the legal and business operation of ACOs in commercial markets and CMS programs other than Medicare Shared Savings (MSSP)."
Shameless plug: I’ve built an ACO-like provider-sponsored health plan and learned some great lessons in the process. Contact me if I can assist. (


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