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David Dranove is an economist and professor of health industry management at the Kellogg School of Management, Northwestern University, Evanston, Ill.
David Dranove is an economist and professor of health industry management at the Kellogg School of Management, Northwestern University, Evanston, Ill.

In ACO era, physicians will still play a leading—but changing—role


By David Dranove
Posted: July 12, 2014 - 12:01 am ET
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More than 8 million Americans have signed up for health insurance thanks to the Patient Protection and Affordable Care Act. Significantly increasing access to care, the 4-year-old healthcare reform law also creates incentives for providers to reorganize the delivery of healthcare.

The ACA has promoted the growth of accountable care organizations. Where successful, ACOs have the potential to bend the cost curve and improve quality. They are taking many forms, with some led by large multispecialty group practices and others by vertically integrated hospital systems with cadres of employed physicians.

Physicians will always remain central to patient care. Yet the ACA challenges the traditionally, if not fiercely, independent practice of medicine. The 21st-century physician is increasingly employed by a large provider organization with accountability to management, subject to standardized treatment protocols and required to interact with complex electronic health records.

Just how physicians will transform medical care in this new environment engenders much conversation, as was recently demonstrated at a healthcare management symposium held last month at Northwestern University's Kellogg School of Management on “The Future of the Physician.”

Health industry leaders offered their perspectives on the ACA's impact on the business of healthcare. Among the distinguished speakers, presidential adviser Dr. Ezekiel Emanuel provided several provocative predictions, ranging from the end of employer-sponsored health insurance to the closure of 1,000 hospitals. Dr. Ardis Dee Hoven, then-president of the American Medical Association, shared strategies physician groups are using to reduce the economic and social burden of chronic diseases.

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Here is my take on some conference highlights:

Insurance companies still serve a purpose. Integrated health systems have entered the insurance marketplace, leading some to speculate the end of the Blues, Aetna and UnitedHealthcare. However, early attempts to provide insurance and provider services in one organization have shown only limited success. Insurers continue to have the risk prediction know-how and data capacity to identify best practices to steer patients toward cost-effective providers. They aren't going anywhere for now.

ACOs can and do listen to doctors. It's a myth that ACOs are physician control freaks, compromising patient care to dollars and cents. ACOs do offer contractual relationships between various parties to control costs and improve quality. Ideally, they encourage physician participation in governance and work closely with them to develop protocols. ACOs may be a modern-day version of HMOs, but this time around, they may afford better access and fewer administrative snafus. If they can provide coordinated quality care and save money in the process—the jury is still out with regard to these goals—it will be a win for everyone involved.

Digital medicine will drive the cost/quality equation. Physicians complain that user “unfriendly” EHRs take time away from the patient-physician interaction—a major reason cited for their increasing job dissatisfaction. Agreed. EHRs are frustrating. We are currently in the Wild West here with multiple record systems sold by a variety of vendors whose products remain largely incompatible. Yet as a country, we spend close to $3 trillion annually on healthcare without much to show in the way of quality. Electronic documentation offers a solution: it provides the data required to begin linking the quality of care to the cost of care. EHR systems are evolving. We all need to be patient. We'll get there because we must.

Only cost-conscious physicians need apply. In the 1970s, television character Marcus Welby, M.D., epitomized the family doctor who did everything that was medically possible for his patients, sometimes stepping outside of standard practice if he felt it necessary. Dr. House, an opiate addict with a borderline personality disorder, replaced the beloved Dr. Welby, only to show even less concern for costs and standard practice. This model is no longer sustainable.

Physicians must own up to the economic consequences of their decisions, whether through employment or contractual models. Physicians must also come to accept treatment protocols, however rigid they may appear. We have tolerated widespread practice variations for too long. And medical schools must seriously consider a curriculum overhaul that teaches physicians how to manage the care-delivery process.

The future of physicians remains secure. With the newly insured accessing care, physicians—primary-care specialists in particular—are in high demand. The ones who can adapt to a post-ACA world and participate in the coordinated delivery of care will likely thrive. They may even find greater job satisfaction, if healthcare reform provisions truly result in saving lives and money.


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