Trendspotter: Fledgling IPA Charts Its Own Course

Accountable care organizations (ACOs) are supposed to improve quality and cut costs by getting hospitals, doctors, and other providers to work together. But increasingly, observers are raising the possibility that ACOs might raise costs faster by consolidating providers and forcing payers to accept big payment increases.

The main reason for this concern is that hospitals are expected to be the driving force behind the ACO trend. As they grow by acquiring other hospitals and employing more physicians, healthcare systems are becoming ever more influential in many markets. The advent of ACOs promises to increase that dominance - assuming the government lowers the antitrust and other regulatory barriers to forming these organizations.

But hospitals need not control ACOs. In fact, under the health reform law, they don’t even have to be ACO members, although their cooperation will be needed. The American Medical Group Association (AMGA) has started an ACO collaborative to help large group practices form ACOs. There are also clinically integrated IPAs and PHOs that could easily become ACOs, and 50 to 75 other physician-led organizations are on the same path, according to one estimate.

Among these entities is the Beacon IPA of Manhasset, NY, on the north shore of Long Island. Formed last summer, the IPA already has about 200 physician members, according to nephrologist Simon Prince, the IPA’s leader. The IPA’s long-term goal, Prince says, is to become clinically integrated and ready for whatever healthcare reform brings, including ACOs.

The IPA is not affiliated with any hospital “by design,” says Simon, the immediate past president of the medical staff at North Shore University Hospital in Manhasset. “We are trying to remain free agents.” Instead of being part of a hospital strategy, he says, the IPA wants to create its own strategy.

The main impetus for formation of the IPA, he explains, is the growing power of the North Shore-LIJ Health System, which is the dominant healthcare player on Long Island. North Shore-LIJ has hired a lot of physicians, creating fears among some private-practice doctors they might not be able to survive on their own.

“A lot of doctors didn’t go into medicine to become employed physicians, but the environment is such that it’s very difficult to maintain your independence,” Prince says. “So I felt an IPA was the best alternative that would allow the individual practices to maintain as much autonomy as they can.”

To become clinically integrated - which would allow the IPA to negotiate with payers, as North Shore-LIJ does - the doctors must have EHRs. So its members have agreed that, within six months, they will either have EHRs or have plans to get them, Prince says. At that point, the IPA will start to build the infrastructure for clinical integration, following the Federal Trade Commission’s guidelines that have allowed other IPAs and PHOs to bargain with payers.
The government incentives for meaningful use of EHRs will be a significant help to the practices in the IPA, Prince says. In addition, the IPA will provide some technical support to help physicians implement their EHRs and show meaningful use.

Where will the money for these activities come from if the IPA isn’t affiliated with a hospital? Prince says the IPA is in discussions with Empire Blue Cross Blue Shield and other payers. He suggests that the plans might be willing to kick in some extra funds to help the IPA become clinically integrated with the prospect of lowering overall costs down the line. Later on, if the IPA’s added value brings in enhanced payments, he says, part of that extra money could finance the IPA’s operations.

So far, Prince has been pleasantly surprised by the local payers’ interest in working with the IPA. He speculates that their interest might be prompted by their inability to limit cost increases from North Shore-LIJ, which has negotiated “very big rates… If they give us something extra and help to avoid that, I think that’s attractive to them.”

Meanwhile, Prince doesn’t rule out a future agreement with a hospital to form an ACO. “Remaining a free agent and seeing what the best fit is for us could be our advantage. If we grow and become a little more attractive, it might put us in a better position to negotiate a deal with a hospital or health system down the road.”