Much has been written about the Affordable Care Act (ACA) and one of its ongoing experiments is known as Accountable Care Organizations (ACOs). Recently The Wall Street Journal published an opinion with the headline “The Coming Failure of ‘Accountable Care’”. While I agree with the authors that many ACOs will fail, I believe that they will fail for different reasons.

I have two different perspectives on this. One is based on 30 years of experience as an emergency physician in clinical practice, remembering the early days of managed care when HMOs were created to do much of what is expected from ACOs. A second perspective is as the CEO of a physician management company with almost 100 client hospitals. I believe that physicians and hospitals will indeed change their behaviors, and rapidly, once the ACA takes effect and they get paid based on value and not for the number of billable services provided. Otherwise, they simply won’t be able to compete with physicians and hospitals which are more efficient and provide better quality at a lower cost.

Patients have been arriving at the doors of Emergency Departments in increasing numbers over the past decade, and this trend will only grow in the future. I believe there are five key factors that suggest every ED should brace itself for a never-ending rush hour.

As the CEO of a physician group that provides medical care to over 4 million patients per year, I have the opportunity to study in great detail the trends in patient acuity, demographics and yearly visits in more than 80 emergency departments and watch the monthly variations.  I recently asked staff, with the assistance of our in-house biostatistician, to project the ED patient volume in the future based solely on the incremental increase in the past patient volume in the past decade, while making no other assumptions.

The results were startling. If nothing changes, the “people curve” of patient visits to the emergency departments we serve will rise dramatically by 2020. These futures are merely a projection of actual growth rates from the past decade and they showed a doubling in ED patient volume between 2000 and 2020. At a hospital in California’s Central Valley, for example, we saw the volume of ED patients rise from 50,000 in 2000 to 70,000 in 2010 and they are expected to grow to 95,000 by end of this decade.  Most noteworthy in the analysis were the number of hospitals with ED visits that are projected to exceed 100,000 patients per year.

In the wake of healthcare reform, the Department of Health & Human Services (HHS) created a transitions of care implementation and evaluation plan. The Joint Commission has created an entire transitions of care portal to guide healthcare organizations through the operational improvement process. It is rare to see big government so interested in the nitty-gritty of hospital management at this level of detail; but their interest reflects the degree of potential benefit in improving information gathering and sharing during the transitions of care.

HHS foresees the improvement of transitions of care, defined as the movement of patients between various healthcare settings, and predicts that in the future this will play a big role in improving patient safety and cost savings. HHS is clearly anticipating that many different hospital departments and physician specialties within the hospital will become ‘virtual business partners’ as patients segue from one area to another. Benefits that will accrue to all stakeholders from smoothing the movement of patients among departments include the increased sharing of risk, which, in turn, restrains costs; as well as a more dynamic system in which each service builds on the success of the others.

The coming widespread implementation of the physician reimbursement methodology, known as bundled payments, will require hospital-based physicians to find more objective ways to demonstrate value and seek leverage in the determination of how money will be distributed, from both commercial and government entities. The concept of bundled payments is not new. It was previously used for years on a limited basis in demonstration projects by CMS.

But today, healthcare reform is making it one of the more important elements to cost containment. Bundled payments, and the accelerating trend among hospitals and physician staffing companies to consolidate, will require true integration of the clinical care delivered by physician specialists across the Acute Care Continuum.

Which Hospital-Based Physician Specialty Will Wield The Mightiest Pen In The Future?

In my last two blogs I examined how the dynamic behind bundled payments will create a vacuum to be filled by those with the most leverage. The leverage wielded by any physician specialty group will be determined not only by its ability to generate the most revenue and to save the most money, but also by the size of its integrated group.  And as CMS puts greater emphasis on hospital-acquired infections and readmission rates, I believe we will see the hospitalist emerge as the hospital-based physician specialty that holds the most leverage within the hospital in the new healthcare environment.

In the past, hospitalists have been on the lower end of average compensation for all hospital-based physicians, but that can be expected to change significantly in the future. Although they are a relatively new specialty compared to their colleagues, the growing leverage of the hospital medicine physician within the hospital may soon overshadow that of the other, more-established hospital-based physicians. Their importance to the financial performance of the hospital continues to become more apparent with new compensation methods being promoted by both commercial and public payers.