Accountable Care Organizations (ACO) – Hospitals Buying Up Practices

Everyone in healthcare is currently talking about the recently released proposed rule on Accountable Care Organization (ACO). In fact, I posted on EMR and HIPAA a guest post about the ACO Legislation and its ties with healthcare IT, meaningful use and EMR. It’s definitely worth a read.

This move to ACO’s (and to some extent healthcare IT) were described nicely by Maria Todd on Twitter:!/AskMariaTodd/status/54972089865748480

As many have said, the ACO train has left the station. In an October article, HIStalk posted about the movement of hospital organizations acquiring physician practices and offered some lessons learned from similar movement back in the 1990’s.

An interesting analysis: hospitals are buying up primary care practices to prepare themselves to become Accountable Care Organizations, which could be the end of the line for small, independent practices. Hospitals are looking at increasing PCP salaries like a Wall Street analyst looks at price-to-earnings ratios, knowing that internists and family practitioners generate hospital revenues at nine times their average salaries, while expensive specialists generate a multiple of only five times their salary. For industry noobs, it’s time for hospitals to get taken to those 1990s cleaners all over again, because:

  1. Docs sell out precisely because they don’t want to work  as hard for their new hospital employer as they did for themselves (duh).
  2. Hospitals are notoriously bureaucratic and inefficient managers, making them particularly unsuited for running a low-overhead medical practice in every way from EMRs to personnel policies to regulatory compliance.
  3. Private practice docs hate and distrust everything about hospitals except the money they have and don’t usually change their opinions or behaviors just because they sell them their practices.
  4. Doctors resent taking orders and being told how to practice medicine, especially from suit-wearing hospital MBA-types who fancy themselves business experts despite always having worked for a paycheck instead of themselves, making it likely all these deals will fall apart in 4-5 years like they did last time around, with the docs scrambling to start up new practices without the benefit of a location, an EMR, or patients that they sold away to the local hospital in a frenzy of co-opetition.
  5. Patients aren’t much more enthused about hospitals than doctors are, so they aren’t exactly thrilled to see the big sign go up over their friendly little doctor’s office knowing it’s the same folks with ED waits, bad cafeteria food, and terrible parking.

I’ll be really interested to see how these ACO organizations play out and if it is indeed the end of the small physician practice. Although, my gut feeling say that this is cyclical.

While hospitals buying physician practices is one method for creating an ACO, I’d love to hear other models that might be used to create an ACO. Feel free to sound off in the comments with your thoughts and ideas.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference,, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.


  • As a physician who is going “against the grain” (ie “hospital owned” to private practice” rather than in the opposite direction) I have the following model of action to become part of a patient centered rather than exploitative ACO:

    1) Establish my rural practice in my house at a very low cost, including asking some of my patients who volunteered to help with construction.

    2) Employ myself, a front desk person and a Medical Assistant with backups

    3) Establish Telemedicine links to needed specialties (rheumatology, pulmonary, cardiology) AND use physician social networks (eg, Sermo, MedLink Neurology Forum) for informal networking

    4) Use LabCorp as a reference lab with negotiated discounts on high yield labs for one of the practice’s centerpieces: preventing stokes, heart attacks, renal insufficiency, onset of diabetes and diabetes complications. Likewise have a systematic literature scan process using EMBASE rather than PubMed for enhancing the testing and intervention effectiveness of the practice’s goals

    5) Embed in the practice’s patient education, instruction and self-care facilitation expertise in efficiently discussing and following up on patient-centered discussions

    6) Embed in the practice’s counseling activities the ability to counsel patients about which Part-D plan to choose and which health insurance plan to purchase (minus Medicare)

    7) Use a general internist centric and concept driven EMR as the practice’s EMR and optimize its functionality for delivering efficacious brief interventions

    8) Participate in community groups (eg, Rotarians) and recruit community leaders interested in enhancing the value of care that is being delivered to the community

    9) Intersect with the state’s evolving HIE and structure information collection so that disease classification information can be transmitted to an HIE capable of accepting that information. Constantly improve the practice’s ability to collect disease classification information and include that information within the practice’s concept driven EMR.

    10) Code reponsively with the help of a viable clinical concept parser, emphasize patient communication, use evidence and experience to follow-up on disease classification information by using efficacious brief interventions and systematically track outcomes while emphasizing 24 x 7 continuity of outpatient internal medicine care.

  • Charles,
    I love the different approach. The question I have is how many doctors are going to take these type of unique approaches to healthcare and breakaway from the strong trend towards hospital owned practices?

    I’d love to hear which EMR you’ve chosen to use and how it’s gone for you.

  • There are very few doctors who will go in this direction unless they are very seasoned, very passionate and very persistent.

    The trend toward “hospital owned physicians” will last as long as the hyperprofits last because of “facility codes” and that, I predict, is not much longer.

    The EMR I am using is Welford Chart Notes programmed by a very seasoned, very passionate, very persistent and excellent general internist, Charles Welford. It has customizable vocabulary, synonym thesaurus, clinical concept parser, rule base for 500 separate rule sets, intersects with Instant Medical History (Primetime Software) / Dynamed / Up-to-Date, QMR (out of date intersection, however). The clinical concept parser, for example, recognizes concepts (e.g., medication names, problem names, allergy designations…) in the clinical note and allows for the semi-automatic filing of those data into appropriate bins (i.e., Medication List, Problem List, Allergy List….etc). It is by no means a panacea to the EMR doldrums that are omnipresent but at least one does not traverse mindless menus to get at documentation points.

  • Fascinating
    I use Welford x 7.5 yrs in just such a setting Learned much through Ideal Medical Practices
    I have superb quality low er use low re admits low cost data.
    Although in the current environment, without hospital subsidy, with FFS, with specialist garnering wages of 500,000+ a yr in my locale, I suffer financially.
    Meaningul use should have used their money to buy us all out and put us on one simple emr so every doc could talk to every other doc and lab.Duh

  • Thanks Dr. Antonucci for the pointer.

    That is the kind of organization primary care physicians need to support and in which to participate and learn.

    Noticed from their 2012 Annual Meeting that EMR’s were compared.
    It is an organization well worth joining and sharing expertise.

    Your point concerning the money being wasted in Meaningful use is apropos, to say the least.

    The money wasted in the VA/DOD interface debacle, HIE Tower of Babel; EMR/EHR implementation cost overruns & productivity plunges, Meaningful Use amidst plan proliferation / obfuscation of care and primary care rationing by inconvenience…etc would have paid for the implementation of an EMR / EHR / HIE that was primary care physician centered and clinical outcome productive.

    As with you I think it is productive to participate in a “bottom-up” fashion (e.g., Ideal Medical Practices) while pushing the cost-effectiveness of this approach upon politicians who must come around to supporting this approach for $ reasons.

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