Almost all big box health plans are building their own brand of ACO with regional health systems and affiliated physician groups.
“ You generally hear that what a man doesn’t know doesn’t hurt him, but in business what a man doesn’t know does hurt. ”
— E.S. Lewis
As experienced full-time health industry consultants, we build ACOs for physicians and local health systems, so it is not surprise that we are also called upon to review managed care and ACO participation agreements for clients all across the country. Clients take comfort in knowing that they can count on our experience and insight to identify and highlight the risks and subtleties of the words in the contracts for them. These risks often come in several flavors: political, financial, and strategic.
Strategic risks
No matter how unique your brand, if you are one physician among 350 vying for position in the ACO, you will be offered a form agreement and a “take it or leave it” option. Consider it as the conductor that is saying “all aboard.” On or off? And if you get on the train, you don’t get to tell the driver where to take the train. You will be going where everyone else is going on that train… or you won’t get on the train in the first place. We’ve seen some of the terms and conditions on these contracts that are actually more restrictive than the government’s Shared Savings Program requirements. Most of our clients are surprised by our findings. That leads me to believe that they a) didn’t have a strategy and b) didn’t read the requirements, and c) haven’t read the operating agreement that was used to memorialize the form of the ACO (not the same as the participation agreement). The devil is in the details.
Political risks
Selecting an ACO with which to participate in the community is tantamount to picking a team to support. You may put on the jersey of the losing team. That’s a risk we all take in business. but, in many cases, if an ACO starts to falter, the physicians who own it can take steps to adjust strategy, remediate, or respond to key performance indicators (KPIs) that show something is wrong. That’s not possible when they are not in control because the local payer is making all the decisions without physician or facility input. Make sure you have input and that you’ve aligned with an organization that is thinking strategically, and with the right infrastructure and governance. If you see KPIs that are not addressed and you fear for your safety, your sanity, or your clinical decision-making and clinical autonomy, make sure you have an exit strategy that is easy to execute without a lot of disruption to your business operations and your patients. Always always always scrutinize the contract for an exit strategy on the way in, not when you need to use it. Look for ways to get out without being required to remain for a certain number of years, and look for any indication of a non-compete that could cause grief if you choose to change your shirt to another team’s colors.
Financial risks
Being paid too little on a fee-for-service basis, or accepting too much individual risk through capitation and bundled case rates are the most frequent non-starters we encounter. But what are the other financial risks? Could there be some assessment at the end of a period of time? Withholds? We’ve see all of the above.
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