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KSM Blog | Katz, Sapper & Miller CPA

The Appeal of Accountable Care Organizations to Private Practice Physicians

Posted 9:21 PM by

Accountable Care Organizations (ACOs), the subject of much speculation and debate, are officially a part of the ever-changing landscape of American healthcare. In July of 2012, the Department of Health and Human Services (HHS) announced that 89 healthcare organizations across the country qualified to become ACOs. For a little perspective on the scope of this development, the 89 newly announced ACOs will serve about 2.4 million Medicare beneficiaries, which is approximately five percent of the nation's 49 million total Medicare beneficiaries.

As ACOs continue to expand and new healthcare systems qualify to become ACOs, it is a fair question to ask whether the independent, physician-owned practice is a thing of the past. Independent physician practices and ACOs are both subject to the risks of rising malpractice costs and uncertain future reimbursement rates, yet ACOs are better able to tolerate such risks because they are larger in size. Depending on how the arrangement between the ACO and physician practice is structured, an opportunity exists for independent physicians to shift certain financial risks onto an ACO. 

There is a perception that an independent physician who joins an ACO must sacrifice the autonomy of private practice. However, the degree of independence maintained by a private practice joining an ACO is largely dependent upon how the arrangement with the ACO is structured. Legal counsel familiar with the applicable state and federal laws will need to provide guidance, but the regulatory guidance pertaining to ACOs provides flexibility to accommodate for the diversity of legal structures and contracted arrangements within the healthcare industry. Therefore, independent physician practices can become members of an ACO without having to make significant changes to their own legal structure or completely sacrificing their own independence. 

As the healthcare industry continues to evolve, it would be prudent for independent physicians to explore the opportunities and risks of joining and/or competing against an ACO in the years to come. 

About the Author
Jimmy Wade is a member of Katz, Sapper & Miller’s Healthcare Resources Group. Jimmy provides tax preparation and planning, financial statement compilations, healthcare consulting, and fair market value analyses. Connect with him on LinkedIn.

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