Physician Network Revenue Cycle

Preparing for the Value-Based Care Organization (ACO) model is becoming a reality for hospitals and health systems across the country, and addressing how to react to the upcoming changes is floating to the top of senior executive agendas. This movement is gaining momentum as executives recognize that the current fee-for-service model of reimbursement is unsustainable for government, for private payers, and indeed for providers as well.

Nothing is more crucial to success with ACOs than having a well-executed primary care strategy.  Primary care physicians (PCPs) can help your ACO understand how to be productive under this new model, by understanding best practices, focusing on preventative medicine, utilizing IT to their advantage, and working with new care models such as Patient-Centered Medical Homes.

We see hospitals fall on a continuum when it comes to a primary care strategy, or lack thereof.  Some, due to market conditions, foresight, or historic ties to physicians, have aggressively pursued employment relationships with PCPs. At the other end of the spectrum, hospitals have engaged hospitalists and have minimized their relationships with PCPs.  Rocket science is not required to figure out who is better positioned to deal with the Value-Based Care model.

Recently we saw this problem first hand.  A  CEO noted the positive culture he and his physicians had been able to develop around improving quality, and the openness of physicians to the organization’s laser-like focus on the issue.  Given that experience, he expressed confidence that his organization could develop the collaborative physician culture to support an ACO.

However, he had to admit one Achilles heel:  the hospital had almost no relationship with the local primary care base.  The organization had developed an inpatient care model based on hospitalists, which was quite successful in improving quality and efficiency.  However, these gains came at the expense of the hospital’s relationship with its PCPs, and the CEO recognized that the gains in quality and efficiency had to be augmented with an engaged and focused group of PCPs trying to manage care.

Developing this type of relationship with your PCPs is one of the most important aspects in the ACO development process.  The PCP is important in the ACO model for numerous reasons:

  1. Under Medicare, patients will be assigned to an ACO based upon evaluation and management codes related to the primary care providers.
  2. Primary care physicians will be empowered to provide care coordination in order to reduce redundancy and improve the handoff process.
  3. Primary care physicians will focus not only on sick care, but on overall health, prevention, and disease management, with the ultimate goal of substituting such services for more expensive specialty interventions.
  4. Primary care physicians will have a central role in educating patients about their health, the healthcare system, the care alternatives, and the efficacy of those alternatives.

A primary care strategy should be developed with the following considerations:

Defining Adequate Primary Care Supply
Performing a primary-care specific physician needs analysis for the current year and post -2014 for your community will provide what level of primary care need must be addressed.

Defining the Alignment Model
Under an ACO model, the most effective and efficient method of alignment with current and to-be-recruited primary care physicians is the physician employment model.  This model will ensure control over volume and referral patterns, surmount legal hurdles related to joint contracting, and ease the transition to a consistent EHR.

Defining the Primary Care Model to Promote Efficiency and Effectiveness
Primary care physicians will have to be integrated into the ACO as the base for coordination of patient care.  This coordination will likely require the development of different primary care models (such as the medical home model, or another physician-extender-heavy model) to meet the needs of the patient base, as well as the supply and availability of primary care resources.

Integration of EHR
The use of information technology, specifically an EHR, will play a large role in the primary care physician’s ability to coordinate patient care between the PCP, specialty physicians, the hospital, and any other service providers.  Over time, an EHR will allow for more physician-led disease management, as well as reducing utilization by removing redundant and/or unnecessary care.

Developing Management Capabilities to Facilitate Throughput
In addition to the incremental demands placed on PCPs from ACOs, the rise of newly insured patients in 2014 will threaten to overwhelm the primary care capacity of all markets.  PCPs will need to be coached to be “managers” of their practice, and integrate nurses and mid-level providers more substantially into their practice patterns.

Focusing on Quality Outcomes
The current fee-for-service model approach gives physicians direct incentive to produce volume and turnover within their patient base, but only provides marginal incentive to focus on quality outcomes.  The shared savings model associated with Value-Based Care Organizations will require physicians to produce quality outcomes, in order to limit unnecessary utilization in the form of hospital readmission, ED usage, and outpatient service usage, which in turn increase the costs to treat that patient.


David W. Miller

Founder and Chairman

Travis Ansel

Chief Executive Officer and Managing Director, Strategy