Could Accountable Care Organizations Stifle Physician Learning and Innovation?

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1 Huesch, Marco, Douglas, Pamela, Schulman, Kevin, 2014 Could Accountable Care Organizations Stifle Physician Learning and Innovation? Health Management, Policy and Innovation, 2 (1): Could Accountable Care Organizations Stifle Physician Learning and Innovation? Marco D. Huesch, Duke University Pamela S. Douglas, Duke University Kevin A. Schulman, Duke University Abstract We consider some of the unintended consequences of health care delivery models redesigned around accountable care organizations (ACOs), including restricted physician learning, slower quality improvement, and continued upward pressure on overall costs. Specifically, if current ACO policy fails, consolidation and increased market power will result in purchasers of care paying higher prices. If ACOs succeed only in becoming rules engines that improve coordination and process conformance among treated patients then the quality promise will not have been met.

2 The accountable care organization (ACO) concept is still in its infancy, but concerns surround the risk of increased provider market power and upward pressure on prices (Richman and Schulman 2011). However, other unintended consequences of such redesigned care delivery models could contribute to slower quality improvement and continued upward pressure on overall costs. Augmenting the widespread but separate trend towards and beyond majority physician employment by hospitals (Kocer and Sahni 2011), ACOs are intended to lead to better provider integration and tighter physician-hospital relationships. The impetus is clear: for too long the delivery of care has been a fragmented and uncoordinated cottage industry (Swensen et al 2010). Yet if the formation of ACOs simply leads to larger forms of non-integrated delivery, little of the quality promise will be realized. Worse, the combination of employment and low incentives to allow physicians to circulate across different ACOs will close off a physician s practice. An important ramification is on physician learning. Physicians learn on two broad dimensions (Berwick, James, and Coye 2003). They learn to perfect a diagnostic work-up, a treatment order set or a procedure. This form of learning is predicated on exploiting the known, reducing variability and conforming to a well-defined, measurable and communicable standard (eg, fast, consistent door-to-balloon times in interventional cardiac care). But a second form of learning is the antithesis of the first. Here the imperatives are exploring the unknown, increasing variation and experimenting when standards are less well defined. Performance here is far less easy to measure, harder to codify and communicate, with 2

3 longer lags between changes and outcome reactions. Successful learning of this sort leads to a dynamic and innovative organization. Both types of learning are necessary, yet neither is sufficient for continuous quality improvement (Berwick, James, and Coye 2003). Successful organizations in many industries balance learning on each dimension (March 1991). Organizational structure strongly influences health care quality (Donabedian 1978), and the closed organizations fostered by specialist physician employment and current ACO policy will have different effects on the two types of learning. Closed practice groups and integrated physician-hospital networks should deliver greater process conformance. The logic of opportunity suggests that being restricted to practicing in one environment drives increased physician familiarity with policies, staff and technological infrastructure. In theory and practice, larger stocks of knowledge achieved on learning curves support such a practice makes perfect mechanism. Moreover, in the face of employed or otherwise geographically immobile physicians, hospitals will be able to invest in increased training and harmonization of practices (eg, through acquisition and deployment of proprietary electronic health record systems). The returns to such investments will accrue more predictably to hospitals, strengthening ACOs as rules engines internally, and market power engines externally. Medicare has implemented ACOs coupled together with required reporting of process measures (Berenson, Pronovost, and Krumholz 2013). These requirements may reinforce the rules engine approach on the part of providers. However, such process conformance comes at a price. Increased familiarity with one way of practicing medicine militates against frequent change and updating. Partly this is a rational trade-off between high fixed set-up costs of re-training and lower variable costs under a new 3

4 regime (eg, a revised order set). Partly, too, aversion to change is a well-known cognitive bias in the form of an endowment effect (Kahneman, Knetsch, and Thaler 1991). Process conformance engines may also not allow for the flexibility to either learn from individual cases or modify guidelines in a way that reflects the unpredictability of medicine and the uniqueness of each patient. When coupled with restricted physician mobility and higher organizational barriers, learning may be further compromised. Lower means to interact reinforce the lower motivation to innovate, learn and change. The logic of contact suggests that physicians working in more open organizations may be able to exploit diverse sources of process improvement knowledge. Organizations which block or discourage physicians from roaming across other organizations, may find that learning from such other sources may be compromised. In theory, open organizations can implement such new knowledge faster and with less organizational resistance. In practice, too, the influence of other physicians and especially key opinion leaders has been shown strong (Berwick 2003), and increased opportunities for close interaction between physicians practicing in varying styles and different places to be beneficial (Meltzer et al 2010; Majumdar, McAlister, and Furberg 2004; O Connor et al 1996). The ACO concept has helped accelerate changes in the traditional relationship between physicians and hospitals (Kocer and Sahni 2011; Charles et al 2013). Of 148 Medicareparticipating ACOs and 77 private sector ACOs currently in existence, there is likely to be variation in the degree to which physician practice patterns emerge within individual hospitals or multiple hospitals. ACO organizational forms and physician employment models may have altered practice and referral patterns. Furthermore, even physicians practicing across multiple hospitals may now be practicing within a single organizational structure (an integrated delivery 4

5 system). Overall, the vicarious experience of learning about different practices and organizational strategies through the referral of their patients to a wide range of other hospitals and specialists may well be curtailed in this environment (Roulidis and Schulman 1994). Many characteristics of the health care industry should already predispose to successful exchange of information. Social norms are aligned with altruistic exchanges of information among physicians. Individual providers can share commercially sensitive information across organizational boundaries with limited fear of liability for anticompetitive behavior. Physicians often practice in overlapping social, physical and commercial settings that should allow close interactions. Yet it has long been understood that variations in practice may be due to insufficient diffusion of information in the community of physicians (Phelps 2002). This implicit fragility of physician communication suggests a high degree of caution in contemplating widespread changes in the organizational structure or business model of care delivery. The successful examples of integrated health delivery systems achieving both process conformance and shaping best practices (Oshiro et al 2009), have happened through slow evolution. It is not obvious that quick, mandated change should achieve the same without unintended consequences. If current ACO policy fails, consolidation and increased market power will result in purchasers of care paying higher prices (Richman and Schulman 2011; Kocer and Sahni 2011). If ACOs succeed only in becoming rules engines that improve coordination and process conformance among treated patients then the quality promise will not have been met. 5

6 Physician learning Both True learning organization Process improvement and redesign Process conformance ACOs as rules engines Neither Cottage industry Failed ACOs as market power engines Fragmented Organizational form Integrated Figure 1. Accountable Care Organization Rules Engines May Not Allow Needed Flexibility and May Stifle Peer Learning ACOs focused on process conformance may not allow for flexibility physician learning and guidelines modification in a way that reflects the unpredictability of medicine and the uniqueness of each patient. By mandating quick change instead of facilitating slower evolution, typical ACOs are unlikely to attain the true integration of examples such as Intermountain Health Care (Oshiro et al 2009) or Kaiser. Whether ACOs will further stifle the transmission of informal knowledge, experience and innovations across their organizational boundaries by restricting physician learning from peers is as yet unknown. What is known is that there are many differences between learning organizations that have been developed to support the practice of medicine and hospitals merely hiring physicians and becoming ACOs. Differentiating between these two organizational forms, and creating incentives for the former over the latrer, is essential. 6

7 Turning our current cottage industry into connected, learning organizations requires attention to the incentives for and against physician learning, and the capabilities required to both conform to care guidelines, and innovate and change those care processes. The possibility of yet more unintended consequences of increased physician-hospital integration needs recognition and further investigation. 7

8 References Berenson, Robert A., Peter J. Pronovost, and Harlan M. Krumholz Achieving the Potential of Health Care Performance Measures. Urban Institute White Paper. Available at: Accessed June 10, Berwick, Donald M Disseminating Innovations in Health Care. Journal of the American Medical Association 289 (15): Berwick, Donald M., Brent C. James, and Molly Joel Coye Connections Between Quality Measurement and Improvement. Medical Care 41 (1): Charles, Anthony G., Shiara Ortiz-Pujols, Thomas Ricketts, Erin Fraher, Simon Neuwahl, Bruce Cairns, and George F. Sheldon The Employed Surgeon: a Changing Professional Paradigm. JAMA Surgery 148 (4): Donabedian, Avedis The Quality of Medical Care. Science 200 (4344): Kahneman, Daniel, Jack L. Knetsch, and Richard H. Thaler Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias. Journal of Economic Perspectives 5 (1): Kocer, Robert, and Nikhil R. Sahni Hospitals Race to Employ Physicians The Logic Behind a Money-Losing Proposition. New England Journal of Medicine 364 (19): Majumdar, Sumit R., Finlay A. McAlister, and Curt D. Furberg From Knowledge to Practice in Chronic Cardiovascular Disease: A Long and Winding Road. Journal of the American College of Cardiology 43 (10):

9 March, James G Exploration and Exploitation in Organizational Learning. Organization Science 2 (1): Meltzer, David, Jeanette Chung, Parham Khalili, Elizabeth Marlow, Vineet Arora, Glen Schumock, and Ron Burt Exploring the Use of Social Network Methods in Designing Healthcare Quality Improvement Teams. Social Science and Medicine 71 (6): O Connor, Gerald T., Stephen K. Plume, Elaine M. Olmstead, Jeremy R. Morton, Christopher T. Maloney, William C. Nugent, Felix Hernandez, Robert Clough, Bruce J. Leavitt, Laurence H. Coffin, Charles A. S. Marrin, David Wennberg, John D. Birkmeyer, David C. Charlesworth, David J. Malenka, Hebe B. Quinton, Joseph F. Kasper, and the Northern New England Cardiovascular Disease Study Group A Regional Intervention to Improve the Hospital Mortality Associated With Coronary Artery Bypass Graft Surgery. The Northern New England Cardiovascular Disease Study Group. Journal of the American Medical Association 275 (11): Oshiro, Bryan T., Erick Henry, Janie Wilson, D. Ware Branch, and Michael W. Varner Decreasing Elective Deliveries Before 39 Weeks of Gestation in an Integrated Health Care System. Obstetrics and Gynecology 113 (4): Phelps, Charles E Diffusion of Information in Medical Care. Journal of Economic Perspectives 6 (3): Richman, Barak D., and Kevin A. Schulman A Cautious Path Forward on Accountable Care Organizations. Journal of the American Medical Association 305 (6):

10 Roulidis, Zeses C., and Kevin A. Schulman Physician Communication in Managed Care Organizations: Opinions of Primary Care Physicians. Journal of Family Practice 39 (5): Swensen, Stephen J., Gregg S. Meyer, Eugene C. Nelson, Gordon C. Hunt, Jr., David B. Pryor, Jed I. Weissberg, Gary S. Kaplan, Jennifer Daley, Gary R. Yates, Mark R. Chassin, Brent C. James, and Donald M. Berwick Cottage Industry to Postindustrial Care The Revolution in Health Care Delivery. New England Journal of Medicine 362 (5): e12. 10

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