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Who Will Control the Accountable Care Organizations? Print E-mail
Written by Bernd Wollschlaeger, MD   
Wednesday, 24 November 2010 10:45

Follow this link  to an important article "Physicians versus Hospitals as Leaders of Accountable Care Organizations" which was published recently on the New England Journal of Medicine website. I urge you to read the article and want to point out several important messages.

The next few years will be a period of what economists call  creative destruction.  Our fragmented, fee-for-service health care delivery system will be transformed into a higher-quality, higher-productivity system with strong incentives for efficient, coordinated care.  Consequently, the actions of physicians and hospitals during this period will determine the structure of the delivery system for many years.  The implications will be profound for hospitals' dominant role in the health care system and for physicians' income, autonomy, and work environments.

The Affordable Care Act (ACA) aims to improve the quality of care and reduce costs. Doing so will require focused efforts to improve care for the 10% of patients who account for 64% of all U.S. health care costs. Much of this cost derives from high rates of unnecessary hospitalizations and potentially avoidable complications.  These, in turn, are partially driven by fee-for-service incentives that fail to adequately reward coordinated care that effectively prevents illness. The ACA includes numerous provisions designed to catalyze transformation of the delivery system, moving it away from fee for service and toward coordinated care.

Incentives for the development of the information systems and infrastructure are necessary for better and more efficient management of chronic conditions.  Achievement of this level of care coordination will require the development of larger integrated delivery organizations, preferably, accountable care organizations (ACOs) that incorporate primary care practices structured as patient-centered medical homes and that can support new investments in information systems and care teams and can maintain service hours resembling those of retailers. A move toward ACOs will mean major changes in the structure of physicians' practices, since even physician-group based ACOs may include one or more hospitals.  Please note they may instead contract with hospitals for specific services chosen on the basis of their relative value.

A crucial question is who will control these ACOs. We can envision two possible futures: one of physician-controlled ACOs, with physicians affiliating and contracting with hospitals, controlling the flow of funds through the marketplace; and one of hospital-controlled ACOs that will employ physicians. Whoever controls the ACOs will capture the largest share of any savings.

For physicians to control ACOs, they would have to overcome several hurdles. The first is collaboration: ACOs will require clinical, administrative, and fiscal cooperation, and physicians have seldom demonstrated the ability to effectively organize themselves into groups, agree on clinical guidelines, and devise ways to equitably distribute money.

If hospitals are to control ACOs, they, too, will need to overcome barriers. First, they will need to trade near-term revenue for long-term savings. Hospitals are typically at the center of current health care markets, and by focusing on procedures and severely ill patients, most have been fairly profitable. Building an ACO will require hospitals to shift to a more outpatient-focused, coordinated care model and forgo some profits from procedures and admissions.

Holding off on creating ACOs is likely to be a bad long-term strategy for physicians.  Therefore, the actor who moves first effectively is likely to assume the momentum and dominate the local market. A wait-and-see approach could succeed if the first mover executes poorly, failing to coordinate care and manage risk. But rather than controlling destiny, cautious actors will be hanging their fate on the mistakes of others.

Last Updated on Monday, 27 December 2010 22:16
ACOs: A system that can deliver on the goals of healthcare reform Print E-mail
Written by Todd Demel   
Friday, 19 November 2010 15:43

The Concept

The recently enacted Affordable Care Act establishes a Medicare shared savings program for Accountable Care Organizations (ACOs) to take effect no later than January 2012. The law makes contracts with ACOs a permanent option under Medicare, the specifics of which will be left to the discretion of the secretary of the Department of Health and Human Services (HHS). 

ACOs are changing the way physicians and hospitals are providing care. Through an ACO's delivery system, provider groups accept responsibility and become accountable for the cost and quality of care delivered to a defined population of patients. ACOs can increase patient satisfaction and potentially lower costs by improving the coordination and efficiency of care. Currently being promoted by our Administration as a system that can deliver on the goals of healthcare reform, ACOs emphasize health and wellness in contrast to our current system that is primarily structured to treat illness. Through payment systems developed by the Centers for Medicare & Medicaid Services (CMS), primary care physicians, specialists, and hospitals assume varying degrees of financial risk and will be rewarded for achieving quality and spending goals. Although much of the discussion about ACOs has been in the context of Medicare, there is growing interest in extending the concept to patients covered by Medicaid as well as private insurance. 


Findings suggest that there exists wide variation in the cost of care across the country, and that the regions that spend more per patient do not necessarily obtain better outcomes. This would seem to put into question whether there is a correlation between the cost, and quality of care. While it acknowledges the valuable role that primary care clinicians play in patient health and well-being, The Dartmouth Institute Atlas Study suggests that such care can be negatively impacted by episodic delivery that is not coordinated with specialists and hospitals. So, merely increasing access to care may not in itself be enough to improve health outcomes. Rather, care is most effective when it is part of a high-functioning system where physicians communicate with each other and ongoing feedback encourages continual improvement (for a copy of The Dartmouth Atlas report, please send a request to

Working Together

ACOs must have a formal legal structure. However, it is envisioned that ACOs will take the form of "virtual" organizations consisting of physicians and other professionals in groups or networks of practices, hospital-physician partnerships, and multispecialty groups. Such organizations may be either associated or directly affiliated with local hospitals through their inpatient work, or through the care patterns of the patients they serve.  The group practices that are coordinated around local hospitals come to serve as an "extended hospital medical staff" thus improving quality and lowering cost by fostering greater accountability. Within this scenario, physicians become more involved with the managing of care across the continuum of different institutional settings. Part of this process involves the prospective planning of budgets with respect to resources and needs, and the ACO must be of sufficient scale that it supports comprehensive and reliable performance measures.  


If successful, ACO members will share in the savings that are achieved through cooperation, the coordination of care, the sharing of resources, and improved bargaining power.  ACOs provide the opportunity to establish value-based rather than volume-based incentives thus leading to improved beneficiary outcomes. The hope is that, ultimately, the ACO model will help to combat overutilization and overbuilding of healthcare facilities and technology. The keys to the success of this model lie in transparency of execution and a spirit of inquiry.

Looking Ahead

Among the goals of healthcare reform is encouraging integrated care within the US healthcare system so that increased levels of coordination can be achieved. In an integrated system, primary care physicians, specialists, and hospitals work together to manage the overall care of their patients thus encouraging and enabling the sharing of patient information and adherence to uniform practice guidelines. Payors can hold such organized systems accountable by assessing the quality of care provided as well as whether or not there has been any unnecessary use of resources. And financial rewards for good performance based on comprehensive quality and spending measurement will serve to further encourage ongoing efforts and a steady revolution towards fully coordinated systems. It is hoped that ACOs will avoid some of the problems associated with past efforts involving capitation and managed care. However, given the details and design that still need to be established, the ACO model can be expected to evolve gradually, over time.

About the Author:  Mr. Demel is the Senior Executive of Physician Management Services at MF Healthcare Solutions.  For more information, please visit: or contact Todd Demel at (954) 475-3199.
Last Updated on Wednesday, 24 November 2010 10:45
Interview Exclusive - Albert Santalo, CEO, CareCloud Print E-mail
Written by Jeffrey Herschler   
Thursday, 11 November 2010 11:06

An experienced entrepreneur, Mr. Santalo founded CareCloud in 2009 with the vision of becoming a healthcare information technology leader focused on eliminating the waste and inefficiency in the healthcare industry today. Previously, Mr. Santalo was Founder and Chairman of Avisena, a software-enabled revenue cycle management company in the healthcare industry where he worked from 2001 to 2008. He is the lead inventor and has a U.S. patent for Avisena's Accounts Receivable Management Methodology. He holds an MBA from FIU.  CareCloud was founded with the explicit goal of uniting a disjointed healthcare industry by giving providers good cause to snap out of their software-imposed quarantine. The firm is striving to replace legacy practice management applications with online solutions that are lightweight, intuitive, and most importantly, connected.  Launched with $2.8 million, the firm just completed its second round of fundraising and has collected an additional $5 million (click here to see the full story published in SFBJ).  I had an opportunity to interview Mr. Santalo (AS) on October 20 and had a chance to learn more about the company as well as his views on health policy and the economy. Below is an excerpt from that conversation.     

Thanks for visitng!

Jeff Herschler (JH)

JH        Congratulations on the $5 million.  How will you spend it?

AS        Product development, programming, increased sales capacity, corporate infrastructure and staffing will be the main focus.  We are hiring.  We have 52 or 53 employees currently and will add 23 more this quarter.  Our firm intends to hire 50 more in the first half of 2011 and an additional 75 in the second half of the year.

JH        Impressive.  Now let's back up a step.  Can you explain to our readers what CareCloud does?

AS        We are a medical practice automation platform based in the cloud. Additionally we offer revenue cycle management services. Unlike legacy software solutions there is no upfront cost and you pay as you go. The CareCloud community is a social network connecting patients, physicians, practices and payers.  The solution is safe, secure and HIPAA compliant.

JH        You mentioned a social network.  Is CareCloud a FaceBook for healthcare stakeholders?

AS        In many respects, yes.  We utilize Facebook-like methods to engage doctors and patients in a secure, social network-like technology environment.

JH        The business plan's foundation is on cloud computing.  Isn't it possible that cloud computing is just another technology fad?

AS        No way. The benefits of cloud computing, otherwise known as Internet-based computing, are too great to think it will ever go away - it's not just another Internet bubble; it's the future of IT.  Physicians realize that to optimize their practice, they must embrace technology.  We offer that technology but you don't need to be a techie to use it.  It's also very accessible because it's a pay-as-you-go model.

JH        The medical home and the accountable care organization were two pillars of healthcare reform.  Can your technology help transform these ideas into reality?

AS        Without a doubt.  These two related concepts put the burden on primary care to keep patients healthy.  The systems in place now are practice centric.  CareCloud's solution is patient centric and cross-practice centric.

JH        The Republicans have added Healthcare Reform Repeal to their platform.  What are their chances of success?

AS        Pretty decent. We'll see what happens now that the Republicans have taken control of the House.

(see related article from Repeal 'Obamacare': GOP will try at least posted 11.03.10) 

JH        You launched in the depths of the Great Recession.  What's your view on the economy now?

AS        I think high unemployment is going to be with us for a number of years.  Millions of jobs were lost and now Americans have to retrain for new jobs.  Corporate balance sheets are healthy and the economy is back on a growth track.  Entrepreneurial activity creates jobs but entrepreneurs are also looking to reduce cost by automating and off shoring jobs. 

JH        These are pretty typical elements of the business cycle.  Why do you think unemployment is going to be so hard to solve this time around.

AS        Technology and innovation developments are evolving at a rapidly accelerated rate. This exponential change means some workers are going to be left behind if they do not retool.

JH        To what extent is the government responsible for transforming healthcare delivery?

AS        We need a national infrastructure for financial, administrative and clinical transactions.  The government needs to create the environment for capitalists to build that system. 

JH        Why hasn't the free market been able to do it without government help?

AS        Providers are fragmented and haven't been able to act in a unified manner.  Payers benefit from complexity and disorganization.  They are models of efficiency when collecting premiums but become mired in bureaucracy when it comes time to reimburse.  The whole health system is weighed down by antiquated technology.  We deal with one insurer that accepts submissions using a modem. The mentality is that healthcare is a zero sum game but really it needs to be about the patient.

JH        The prophets of doom would have us believe the nation is headed for ruin.  The reasons for our ultimate bankruptcy are healthcare inflation, unfunded government liabilities and an aging population.  How does healthcare IT prevent the Armageddon prediction?

AS        25 to 50 cents of every healthcare dollar is spent unnecessarily. The culprits are administrative waste, fraud & abuse and redundant care.  Well designed healthcare technology, properly implemented, can solve all three problems.


Last Updated on Friday, 19 November 2010 15:46
Written by Michael Casanova   
Thursday, 09 September 2010 10:55

One essential skill of leaders and leading health care consultants is their ability to identify market forces that are driving meaningful change. An emergent trend that deserves close scrutiny is the transformation of the solo practitioner and the small group practice.  Health care reform appears to be speeding up the process of consolidation within the physician group practice sector.  The era of the traditional solo and duo medical practice model that we have come to trust may be going the way of the dinosaur.  More importantly, if the consolidation trend continues it will be particularly evident in the S. FL Metropolitan Statistical Area (MSA). South Florida has been acknowledged as a mature and heavily penetrated managed care market, dominated by a "small groups" marketplace. The physician delivery system is characterized as disorganized, and heavily dominated by traditional solo and duo medical group practices across the landscape. Put simply South Florida is an ideal market for practice consolidation.

According to a study released in August by the Center for Studying Health System Change, physicians in solo or two physician practices decreased from 41% in 1996-97 to 33% in 2004-05, while the proportion who practice in larger groups of six to 50 grew from 13% to 18%, representing a 38% increase. These statistics demonstrate a definite trend toward large group settings and away from the traditional practice model of the past.

By the same token, there exists very little that has not already been tried in the empirical past. Much like the days of the Nixon administration (circa 1970's) which spawned the creation of DRG's forever changing the reimbursement landscape away from cost reimbursement to perspective payment systems (PPS), today we see more sweeping changes toward more preventive measures and coordination of care across the entire health care spectrum. The root cause driving these changes remains the same threat of an unsustainable health care system or lack thereof depending on one's point of view. Particular perspectives notwithstanding, the traditional one or two physician medical practice models are clearly no longer viable and may be headed for obsolescence. Even a cursory review of history proves that either one adapts, changes and evolves or be selected for extinction.

Not many would argue against characterizing the current healthcare scene as unstable, with rapidly intensifying competition, increasing costs, shrinking profit margins, and intensifying challenges with regard to compliance with consumer expectations. All these forces point toward an unsustainable system and possible medical Armageddon unless all participants in the health care transition re-tool and compromise for the greater good and mutual survival.

It does seem that once again the circumstances of history do repeat themselves. Today physicians' interest in merging with other physicians who may share a common vision is re-emerging. I recall the group practice merger activity of the 90's, and what a disaster that was for most.  One may argue the 90's mergers only left a -$21B hole in the U.S. economy.

Unlike the merger craze of the 90's, this time around is characterized by sober thoughts of self preservation. No doubt this is due to a series of dream shattering economic realities caused by "irrational over exuberance" over a series of decades. We experienced  economic bubbles that began with an S&L bail-out (circa 1980's), followed by a dot-com burst, followed by deficit spending, and arriving today at another housing melt-down combined with massive bailouts all financed and collateralized (i.e., backed by) the "untouchable, sacred" Medicare fund locked box. We have arrived at that point where we can no longer kick the perennial can down the road. Unlike the past, today's practice consolidation isn't driven by caviar dreams and champagne wishes of easy life, but by  survival. No doubt the economist would argue the life cycle model, (i.e. things are born, mature, and either they evolve to another level or they terminate) is just running its course.

           Click here to finish the article

Michael Casanova is a Miami-based healthcare author, executive, and consultant working closely with physicians, medical groups, hospitals and payors.


Last Updated on Sunday, 07 November 2010 10:35
The Pros and Cons of Health Information Technology Print E-mail
Written by Todd Demel,MBA   
Friday, 20 August 2010 10:16

Health information technology(HIT) comprises systems such as the electronic medical record (EMR),computerized physician order-entry (CPOE), and decision support systems that integrate and improve access to health and patient-related data. The adoption of such technologies is a complex process for a number of reasons. Perhaps the primary roadblock to or disincentive for adoption is that it is one of the most expensive capital investments for any healthcare organization. Physician perception varies widely as to whether or not implementing HIT is desirable,affordable, or even feasible.  However, the case is strong for adoption of health information technology as it offers many clinical and economic advantages.


Coordination of Care - HIT enables a framework for the coordination of care thereby encouraging patient-physician partnerships. In this environment, a team of practitioners works together, moving beyond the paradigm of mere episodic visits.

Decision Support -Physicians currently face a myriad of clinical challenges, including many thousands of possible diagnoses that can be treated by various procedures and different drugs, all of which present potential adverse side effects. Such systems serve to integrate and improve access to health and patient-related data.

Access to Information - HIT enables users to retrieve and store vital medical and patient information which allows patients to be notified of recalls, side effects, and interactions associated with medications they may be using.

Reduction of Costs - Electronic Medical Records can reduce filing and transcription costs. By minimizing the need for paper clinical records, practices can reduce the support staff traditionally needed to perform filing and transcription duties. The potential savings here can be substantial.

Decreased Duplication - The implementation of information technology has been shown to significantly prevent the duplication of imaging and laboratory tests.

Improved Coding - There is potential to substantially impact coding accuracy and revenue capture.

Fears & Concerns:

Despite the many benefits of healthcare information technology, many physicians are hesitant to switch to an electronic system. While insufficient financial resources may be the biggest impediment to implementation, negative perception is another contributing factor. Among the concerns expressed by physicians is that, if it is poorly designed, a computerized physician-order entry system could increase medication errors. There is also a fear that, due to the capacity to copy/paste parts of the electronic record it may be too easy to avoid taking a complete patient medical history. And this in turn could lead to inaccurate assumptions about a patient's condition. Since EMR utilizes templates, physicians may also feel restricted when speaking with patients which could impact the accuracy of diagnoses.

Another negative perception related to the implementation of HIT is that, while providers will inevitably bear disruptions to their established system, payers and patients will gain most of the benefits. So, while physicians and health systems must incur the cost and associated learning curve, insurers get to enjoy the substantial cost savings resulting from automated record handling and having to pay for fewer unnecessary tests.

Equally disconcerting to physicians is the fact that many HIT implementation programs have either been fraught with complications, or failed altogether. Inadequate project management is likely the cause of such breakdowns with many projects running late, or over budget. In some cases, the technology may lack features it was expected to have. The culprits often contributing to these problems include poor planning, miscommunication, mismanagement, overspending, as well as rejection by users.

Achieving Successful Implementation: 

Planning - It is critical that during the planning stage physicians are engaged and participate in the process of design and widespread use of HIT. Physician input is critical to the project's success, and the design of the system should incorporate physician input each step of the way. The practice should designate a specific physician champion, an individual with good leadership skills, as they will be able to achieve buy-in from other physicians and staff.

Resources - Allocation of sufficient human and financial resources must be committed to the effort. Both physicians and clinical staff members should be part of this group.

Project Manager - This individual should initiate and assist in the selection of a system vendor.

Equipment - Determine whether the work environment can accommodate a wireless set-up. Investigate the type of hardware that will be compatible with the vendor's software and serve as the best fit for the providers. Consider logistics with respect to workflow and space capacity in the office. Other equipment such as fax machines, scanners, and printers will need to interface with the system. So, all of these details need to be considered with respect to compatibility and design. 

Framework - If the change is to be sustainable, there should be a logical framework established. For example, this could entail having teams first perform the groundwork, and then embed the change.

The team needs to create a sense of urgency for change by stressing the advantages of the technology. The vision should be clear and uplifting and the group guiding and championing the process should consist of respected individuals who can align resources to achieve the stated objectives. The advantages of an electronic system should be emphasized to everyone, highlighting some of the following benefits:

     Clinical decision support tools - available at the point of care to increase accuracy of order sets.

     Customization - enabling patient-centered care, tailored to individual needs, where necessary.

     Efficiency - greatly improved transmission times in sending orders to receiving departments.

     Clinical Database - enabling staff to continually review and analyze orders and outcomes due to the quality and depth of data collected on an ongoing basis.

The message must be communicated ongoing, through multiple channels such as medical staff and other department meetings so that all employees become aware of the efforts and objectives. Removing obstacles wherever possible will empower people and facilitate the use of the system. Addressing concerns and problems as they arise will also go a long way towards expediting implementation. And creating short-term wins along the way can provide momentum. For example, displaying a quality dashboard that reflects early stage improvement in patients, or one that provides a snapshot of outcome data along with benchmarks will demonstrate to physicians the actual impact the technology can have.  Momentum must be maintained throughout the change process as a new culture is gradually born. This can be achieved by getting physicians involved as much as possible during all stages of the implementation process.

Strategies for Success:

Selecting the Right System- Poor choices can lead to numerous problems including disruption of patient care as well as physician dissatisfaction. The purchase decision should be aligned with the clinical strategic vision and consider the system's feature set, ease of use, as well as the satisfaction rate of other similarly-situated users. One of the best ways to evaluate an installed HIT system is by visiting the sites of clients currently using the vendor's product. In this way, the functionality of the system can be observed in various patient care areas during peak times. 

Forging a Partnership - It is important to establish a strong working relationship with the system vendor you ultimately choose to do business with. Because a vendor relationship extends well beyond the adoption and implementation phase, consideration should be given to the degree of a vendor's trustworthiness. Support will certainly be required after the initial purchase phase and expectations should meet with the promises that were originally made by the vendor at the time of sale. Issues will inevitably arise, and a positive vendor relationship can ensure that problems are resolved quickly and that needed support is always available.

Pricing - During negotiations, products, services, and support should be scrutinized with the vendor. The purchase price of the system must include ongoing maintenance, support, and upgrades. 

Physician Preparation - After submitting a proposal, vendors can be invited to perform a demonstration for the medical staff. Identify workflows and clinical processes that may be streamlined, and schedule meetings with physicians so that strategies can be discussed. Since trained physician users can be invaluable champions of the HIT effort, provide mandatory training sessions for physicians and their assistants.

Projections - Implementation will impact patient volume until all functions of the practice have adapted to the accompanying changes. Therefore, physicians should be prepared for an initial decrease in productivity. Since this will necessarily impact revenue, appropriate budgetary decisions must be made. Cash flow projections for practice revenue should be run based on decreases ranging from 25% to (worst case scenario) 40% on a monthly basis for the first 90 days. 

Going Live - Lighten the schedule with respect to elective clinical procedures for the first month after the go-live date to accommodate initial system inefficiencies. Once the system is in place, offer periodic refresher courses. Track metrics with respect to quality, billing accuracy, and user satisfaction. Then display this data on a dashboard and distribute for monthly review by physicians and management staff. 

While implementation of new technology throughout an organization is inherently disruptive as it inevitably places additional burdens and workflow challenges on staff, strategies such as those described above can be employed to make the transition successful. Commitment across the team of physicians and staff will contribute greatly to a smooth transition as well as a positive return on investment. 

About the author:  Mr. Demel oversees Business Development at MF Healthcare Solutions and also serves as Membership Chair-Elect for the South Florida Healthcare Executive Forum.  He has over 20 years experience in healthcare operations, practice management, and marketing, with emphasis placed on outstanding client service. Possessing both operational and financial backgrounds, the MF Healthcare Solutions management team has vast experience in a range of healthcare industry settings. The combined expertise enables the firm to offer specialized and effective physician practice management services. For more information, please visit: or contact Todd Demel at (954) 475-3199. 

Last Updated on Sunday, 29 August 2010 12:36
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