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MGMA 2015: Independent Practices Must Change to Thrive in ACO Landscape


Aligning goals and incentives and embracing change are two keys for independent practices hoping to thrive in an Accountable Care Organization landscape, according to a former Health and Human Services official.

Working as a primary care doctor at an independent medical practice can be an extremely frustrating business. Primary care doctors act as healthcare gatekeepers and play the key role in keeping patients healthy and preventing unnecessary healthcare costs. Yet, historically such work isn’t regularly recognized or rewarded.

As Farzad Mostashari, MD, puts it: “Keeping people healthy is the worst place today under today’s fee-for-service healthcare system.”

As that system begins to fade away, physicians face an opportunity, but they must proceed carefully, said Mostashari, the founder and CEO of Adelade Inc., which provides services to independent practices in Accountable Care Organizations.

Mostashari, who is also the former National Coordinator for Health Information Technology at the US Department of Health and Human Services, discussed these issues in a Tuesday morning talk at the Medical Group Management Association’s annual meeting in Nashville. The session centered on one key question: Can independent practices thrive in an era of risk-based contracting?

Mostashari’s answer: “Yes, they can. But not alone. You can thrive, but you can’t be atomic. You have to link up. You have to network with other organizations who share this decision, who share this incentive and they’ve decided to do this too.”

To that end, Mostashari said independent practices must commit to an accountable care model, work to align their incentives toward that goal, and find partners and team members who share the same vision. He said physicians must make a better effort to truly get to know their patients, both on a personal level and in terms of the patient’s risk category.

However, he also cautioned practices against entering into partnerships with outside vendors, such as chronic care management services, without some hardcore number-crunching. Adding the cost of such services increases the need for savings to offset those costs.

“So anything that we do has to have a return on investment of more than two to one,” he said. “Any dollar that we charge, any revenue that we get has to more than make up for itself in order for it to work.”

Once goals are outlined, incentives are aligned, and partnerships are formed, next comes the hard work of actually reducing costs and improving health. That’s a two-step process, he said: Change and assessment.

Mostashari said he’s encountered some ACO practices who have achieved savings, but aren’t sure why. That’s a problem, because it makes it difficult or impossible to replicate those cost savings.

One are of savings is looking at the costs of specialty care. Extra costs, such as facility fees, can drive up the cost of a patient’s care unbeknownst to the referring physicians. Mostashari said practices need to study up and find out which specialists provide the best value. The “best value” provider may or may not be the lowest-cost provider, he said.

In more broad terms, Mostashari said payers, providers, and patients each must be on board for the reform movement to work, noting that the managed care shift 20 years ago failed in large part due to patient dissatisfaction.

Mostashari described the healthcare reform movement as something of a tentative opportunity.

“We’ve got it right where we want it: Ready for change, right?” he said. “But if when we do that change one out of the three parties really feels like they’re not getting treated well, the whole thing collapses now.”

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