Ron Evans, MPH, FACHE, FACMPE  |  Senior Healthcare Consultant

Future funding of the Patient Protection and Affordable Care Act (PPACA or ACA), more commonly known as Health Care Reform, is currently being challenged in Congress. As a result, some groups may be taking a wait and see attitude.  Most hospitals, health systems and third party payers are not. There is ample evidence that regardless of the eventual funding of ACA in its entirety, many of the concepts and initiatives of the Act will survive.  One of the key delivery system reforms encouraged by ACA is Accountable Care Organizations (ACOs). It represents a concept that will most likely survive any funding challenges to ACA.


An ACO is an entity which, in the language of Section 3022 of ACA, “promotes accountability for a patient population and coordinates items and services under Part A and B, and encourages investment in infrastructure and redesigned processes for high quality and efficient service delivery.” 1 The ACO model is actually not new.  It builds on the Medicare Physician Group Practice Demonstration and the Medicare Health Care Quality Demonstration established in 2003 by the Medicare Prescription Drug, Improvement, and Modernization Act. The term ACO was first used at a 2006 Medicare Payment Advisory Commission (MedPac) meeting during a discussion between the Chair, Glenn Hackbarth and Dr. Elliott Fisher, as a way to improve quality while reducing costs in healthcare. 2Key healthcare leaders have agreed for some time our healthcare system required change. William Jessee, M.D., MGMA CEO, opened at the MGMA 2009 Annual Conference in Denver that the U.S. healthcare system was “fragmented, costly, inequitable, ‘spotty’ when it comes to quality, and ‘perverse’ when it comes to physician pay incentives.”  With regard to incentives, he illustrated, “Hospitals and physicians are paid more for patients who develop complications than those who don’t.” 3Recently interviewed in Becker’s Hospital Review, Tom Strauss, President and CEO of Summa Health System in Akron, Ohio, stated our healthcare system, “is seriously flawed and unsustainable,” adding it, “doesn’t lend itself to collaboration, integration or a multidisciplinary approach to care.”   In that same Becker’s article, Chris Van Gorder, President and CEO of Scripps Health in San Diego indicated, “Healthcare reform probably didn’t change the direction our organization was going, but it increased the speed of the changes we wanted to put in place.” 4According to Donald Berwick, M.D., Center for Medicare and Medicaid Services Administrator, at a recent Health Information and Management Systems Society (HIMSS) conference in Atlanta on February 24, 2011, “ACA is not changing the conditions; it’s a response to the changing social conditions…patients, especially Baby Boomers, demanding more medical accountability, the medical game being imbedded in the social context of a service environment that requires transparency and responsiveness, and health care being inexorably tied to our national economic condition as well as the global economy.” 5
Hospitals, health systems and groups throughout the country are organizing for change, including forming ACOs, and it is doubtful any changes at the Federal level regarding funding parts of ACA will do much to slow the inexorable movement toward ACOs and changes it represents for the healthcare industry as a whole, and physicians specifically. ACOs will fundamentally change the relationship between hospitals and physicians.  Anesthesiologists must be poised to participate in that change.Emphasis on cost and quality, with movement away from traditional fee-for-service payment, are the cornerstones of the ACO model. Dr. Elliott Fisher and colleagues, who helped create and develop the concept of Accountable Care Organizations, have defined the following principles of an ACO:
  1. Providers need to become accountable for the overall quality and cost of care for the populations they serve.
  2. Provider incomes must be decoupled from volume and intensity of services performed; pay should reflect better value: improved outcomes, better quality and reduced costs.
  3. The ACO should adopt fully transparent and meaningful performance measures on both quality and cost. This is necessary to overcome patient resistance. Also, reliable risk-adjusted measures of overall costs are a required element so as to measure impact of care changes at the local level. 6

Implications for anesthesiologists

How healthcare providers both deliver and get compensated for their services will fundamentally change under ACOs.  Just as HMOs and capitated compensation arrangements altered relationships in healthcare in the 1990s, ACOs will likely have the same effect.

Depending on the type of entity developing an ACO, primary care physicians, hospitals or large integrated systems are seen as the major players in the ACO arena.  Nevertheless, anesthesiologists have important roles to play in coordinating and managing care in the peri-operative period, improving efficiency and reliability of that care, and impacting procedural outcomes.  The most important reason anesthesiologists should care about ACOs is the payment methodologies will substantially change in the ACO model from fee-for-service to one based on quality and efficiencies. If anesthesiologists do not actively participate in the process and contribute to its success, the result could mean unwelcomed, significant reductions in compensation.The ASA has been involved at the national level.  In a White House meeting on December 17, 2010 focusing on patient safety and ACOs led by CMS Administrator Don Berwick, M.D., and Ezekiel Emmanuel M.D., Ph.D., President Obama’s Special Advisor for Health Policy at the Office of Management and Budget,  ASA First Vice President John Zerwas, M.D., reported that his comments in this meeting centered on the role of anesthesiologists in the creation of ACO’s, stating, “We have a unique opportunity to lead because we care for patients through the entire peri-operative period, from admission through discharge. Eighty percent of the hospital costs come during the peri-operative period and anesthesiologists, who consistently manage the care of patients during this period, have the greatest opportunity to improve outcomes and lower costs.” Dr. Zerwas added, “As regulations covering ACOs and other delivery system reforms are written, the unique role of the anesthesiologist must be considered if improvements to patient care and cost reduction are to be fully realized.” 7 Involvement in the ACO process must percolate down to the state and local levels.  Just as many hospitals, once fierce competitors, are now forming strategic alliances or merging into large integrated health delivery systems, the “strength in numbers” concept applies to individual anesthesia groups as well.  When single payments for certain populations or for episodes of care become a reality under ACOs, all players in the healthcare arena (e.g., PCPs, specialists, ancillary providers, hospitals) will be vying for their share of those monies.  Anesthesia groups must work to earn a place at the bargaining table, or as someone once said, they will find themselves on the menu!

Size is important, but it’s just one factor for success.  Groups must have a solid infrastructure, with expert administration, revenue cycle operations, prudent payer contracting, and a robust health informatics gathering and reporting system to include: peri-operative efficiency (throughput) measures, risk management, quality improvement indicators, and compliance metrics.  Another imperative is for groups to nurture and enhance, at every opportunity, relationships with their serviced hospitals, surgeons, nursing staffs, and patients. Groups should also publicize to key stakeholders successes in efficiency, patient satisfaction, quality improvement, risk management, and compliance.All evidence indicates ACOs are coming.  Anesthesia groups cannot afford to be caught unprepared. They must remain (or become) engaged with their hospital leadership and with colleagues of other specialties to ensure anesthesia is given due consideration during ACOs development.  Concentrating on the “blocking and tackling” of anesthesia will also pay dividends.  That means having a “knock their socks off” service attitude toward all stakeholders in the process, displaying a willingness to work to control peri-operative costs and improve OR efficiencies, and continuing to strive for high quality, responsive patient care and safety. Lastly, where it makes sense for all parties, anesthesia groups should consider enhancing their leverage through growth.  This is critical for many small and medium size groups wanting to remain independent but with continued input in how ACO payments are divided.Don’t be caught waiting and watching.  The ACO train has left the station and is gaining steam!


1 Bricker & Bricker, Attorneys at Law. “The Health Reform Law Section-By-Section: Accountable Care Organizations, Section 3022 of ACA.”

2 Fisher ES, Staiger DO, Bynum JP, Gottlieb DJ. “Creating accountable care organizations: the extended hospital medical staff.” Health Affairs (Millwood). 2007;26:w44-57.

3 Vuletich, Matthew. “Challenge of healthcare reform fires up MGMA CEO.” MGMA 2009 Annual Conference. October 13, 2009.

4 Fields, Rachel. “One Year Since Healthcare Reform: 5 Thoughts From Healthcare Leaders.” Becker’s Hospital Review.  March 1, 2011.

5 Gillespie, Greg. “Berwick Lauds Health Reform, Says ACO Rule is Imminent.” Health Data Management Breaking News. February 24, 2011.

6 Fisher ES, McClellan MB, Bertko J et al. “Fostering accountable health care: moving forward in Medicare.” Health Affairs (Millwood). 2009;28:w219-31.

7 ASA Washington Alerts. “ASA Leadership Advances Interests of Anesthesiologists at White House Patient Safety and ACO Meeting.” ASA Website, December 20, 2010.


abeo Management Corporation (abeo) serves as a leading source of revenue cycle management and practice management with a specialization in anesthesia. The company leverages its people, processes, and software to serve independent practices, surgery centers, hospitals and healthcare systems with a scope of services that include billing, coding, transcription, practice management, and business consulting.

Join Our Newsletter