Saturday, September 3, 2011

Another Government Disaster

Accountable Care Organizations (ACOs) are part of the new health reform law in an attempt to decrease costs. Following the ACOs protocols, hospitals and physicians are paid on the basis of a fixed budget determined by the bureaucracy in Washington, instead of fee-for-service. Accountable Care Organizations, even though given a nice name, is an attempt by the government to control medical practice, regardless of individual patient medical needs and judgment of those needs by physicians. The start-up costs for instituting this agenda are huge, and the quality of medical care in this country will be further compromised.
Most of our best institutions have opted out of Accountable Care Organizations. The assumption behind creation of the ACOs is that physicians in America are practicing medicine that is too expensive, and that the solution is replacing fee-for service with fixed costs. It is true that Americans practice expensive medicine, but adding to our present centralized-planning price-fixed system will only exacerbate the problem. A major contributor to our high costs is the overuse of technology, driven by a perverse Medicare reimbursement system. For example, taking a good medical history, doing a thorough physical exam, interpreting simple tests, and conceptual thinking of an individual patient’s problems are not rewarded. In addition, there are several other costly Medicare issues as yet unaddressed: patients have no responsibility for the overuse of health care resources, there is a confusing advanced directive policy, and there is an ever-present threat of legal action. In addition to not addressing these problems, ACOs promote an assembly line style of medicine where physicians will have even less time to spend with patients. Thus ACOs are another misguided attempt to decrease Medicare costs by adding to an already excessive maze of regulations.
There are alternatives to our present highly bureaucratic attempts to provide medical care to our population. One alternative that would allow every generation to pay for its own benefits while providing universal coverage at a cost this nation can afford is as follows:

1. Health Savings Accounts (HSA), accumulating tax free starting at an early age, funded in large part by a tax credit for those paying income tax and a reverse tax for those not paying income taxes; the unused portion of those who paid with tax credits can be passed on to their heirs after being taxed. Expensive items would be covered by high deductable insurance that would be federally subsidized for the poor. This would meet the need for every generation to accumulate the funds to pay for their own benefits. Market forces and professional peer review would control costs, ensure quality and protect against legal action.

2. The Patient Self Determination Act (PSDA) to be amended, adding, “Consistent with providing beneficial care to the patient.”

3. A form to be completed with each hospital admission to correct problems with advanced directives and deal with consumerism.

4. Medicare/Medicaid being phased out and replaced with HSA & high deductable insurance that can be purchased before taxes and available throughout the country.

There is a growing physician based National grassroots organization, Docs4PatientCare, which aims to develop policies that are medically and economically sound. The alternative is more from Washington like ACOs.


HaynesBE said...

The ACO model may or may not be a good one. The problem is having the government define and give legal and financial preference to this option--rather than letting it evolve bottom-up, designed and evaluated by the people who really matter in health care: the patients and the doctors.

Thanks for the post. Keep 'em coming.

MikeL said...

It seems to me the problem with the ACO model is not government direction of healthcare activities. From my read, it is trying to move away from 3rd party payer and give responsibility for healthcare maintenance to the 2nd party, the healthcare providers.

The problem is that the patient, the 1st party, is not in control. It gives an incentive for the providers to cut corners in providing healthcare, since they will earn more if they can service a group of patients for less. The control is somewhat nebulously defined qualitative health criteria that providers have to meet, which will be difficult to apply at the individual patient level. Also, the ever present and wasteful control of litigation will be present, but as a lottery-like system with a lot of leakage to the legal industry, it's a very inefficient and ineffective means of controlling quality.

The patient is the only party able to monitor individual results. Your health savings accounts are much better, putting the 1st party in control of the funds to pay for their lifelong care, just as Adam Smith intended.

Dr. Kenneth Fisher said...


Thank you for your insightful comment. I agree that a market approach would allow medical treatment tailored to each individual's needs versus being confined to the black bureaucratic box of regulations.

Dr. Kenneth Fisher said...


Thank you for an excellent analysis of the fallacy of ACOs.

I agree the patient with their physicians guidance must determine her/his best treatment considering their unique needs.

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