Here comes Obamacare's Big Brother: Accountable Care Organizations

The fundamental flaw with ACOs is the Big Brother approach of controlling costs by dictating how physicians may practice. Doctors may decide they'd rather be 'accountable' to their ACO paymasters rather than patients.

Suppose President Obama declared he would tackle rising food prices by forcing everyone to eat at government-supervised restaurant chains. Small restaurants would be nudged to merge with national ones. Bureaucrats would monitor menu items and prices. Restaurants would record orders in a central database to ensure meals adhered to federal nutrition guidelines.

Most Americans would be outraged at such infringements of their basic freedoms. Yet this is precisely the approach the Obama administration is taking by pushing doctors and hospitals into government-supervised Accountable Care Organizations (ACOs).

An attempt to control costs

A product of last year's massive health-care reform law, ACOs represent the latest government attempt to control escalating health costs. Set to take effect next January, they will use financial carrots and sticks to "encourage" doctors and hospitals to merge into large Accountable Care groups, where they'll give care to Medicare patients according to government "cost effectiveness" guidelines. These ACOs would be rewarded for spending less than government budget targets (or penalized for exceeding them). Government would monitor ACO performance with mandatory electronic medical record systems.

ACO proponents argue that this would give doctors an incentive to deliver efficient "integrated" care, while avoiding unnecessary tests and treatments. However, it would also create a powerful incentive to skimp on necessary care. Suppose you saw your doctor for a severe headache and he said, "You don't need an MRI scan. Just take two aspirin and call me in the morning." Could you be sure he was giving you his best medical advice – without being biased by the recent memo from the ACO administrator warning that he might lose his "efficiency bonus" for ordering too many tests?

Even worse, patients could be "invisibly assigned" to ACOs for inclusion in their doctor's practice statistics without their knowledge or consent. Patients might naively trust their doctor to be working for their best medical interest, without realizing that he was simultaneously also trying to please an unseen ACO administrator demanding greater cost control. At best, ACOs create conflicts of interest for physicians. At worst, doctors may decide they'd rather be "accountable" to their ACO paymasters rather than patients.

The fundamental flaw with ACOs is the "Big Brother" approach of controlling costs by dictating how physicians may practice. Not only does this corrupt the doctor-patient relationship, it is unnecessary. Other care models have successfully controlled costs without compromising a physician's ethical obligation to practice in his patients' best interest.

A better model

For example, Dr. Brian Forrest of Apex, N.C., uses "direct pay" and price transparency to bypass the traditional insurance system. By eliminating insurance middlemen and other administrative overhead, he can charge patients less than their Medicare out-of-pocket expenses, yet spend more time with them. He has been so successful in managing patients' complex hypertension, diabetes, and cholesterol problems that in 2009 his small clinic was named one of 26 "Cardiovascular Centers of Excellence" in the United States.

Dr. Forrest's direct-pay model also means that he is accountable only to his patients, not third parties. Similar innovations allow the GeneralCare Medical Clinic in Fort Collins, Colo., and the One Medical Group in San Francisco to also offer quality care at affordable prices. They can do this only because doctors can freely structure their practices without government interference.

Instead of herding providers into ACOs, the government should allow doctors and hospitals to offer their services in a free market. In the least regulated sectors of medicine, such as LASIK eye surgery, patients can freely see whoever offers them the best value for their medical dollar. The result over time has been rising quality and falling costs. Freedom – not government – creates genuine "accountable care."

Paul Hsieh, MD, is cofounder of Freedom and Individual Rights in Medicine (FIRM).

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