Reporter's Notebook

Of ACOs And Proton Beams: Why Hospitals ‘Live In Two Worlds’

By Jenny Gold

June 6th, 2013, 5:58 AM

For the past several years, hospital CEOs have been talking a big game about accountable care—the latest health care model, which pays doctors and hospitals for quality, rather than the volume of services they provide. ACOs make providers jointly accountable for the health of their patients, giving them financial incentives to cooperate and to save money by avoiding unnecessary tests and procedures.

But investing in risk-sharing doesn’t mean health systems are giving up on the fee-for-service system, which rewards providers for every test and treatment whether or not it improves the health of a patient.

Just last week, the District of Columbia approved applications from MedStar Health and Johns Hopkins Medicine to build proton therapy centers, a new-fangled radiation treatment for cancer that has not been proven to work better than standard radiation for the vast majority of cancers, but costs twice as much. Both health systems are also pursuing risk-sharing—MedStar is involved in launching an insurance product, and Hopkins has held itself up as a model of how shared savings can work in an academic medical center.

“It doesn’t surprise me at all,” says Chas Roades, chief research officer at the Advisory Board Company in Washington, D.C., which is also helping to launch the MedStar insurance product. “For every CEO who’s considering a risk-based strategy like an ACO or bundled payments, the dilemma they have is that they have to live in two worlds at once.”  A small part of their business might be invested in population health and minimizing utilization of services, Roades explains, but they’re still dependent on the revenues from their fee-for-service contracts.

“The ACO business isn’t big enough to throw their fee-for-service revenue out the window,” he adds, especially since that may help finance the investments needed to make shared risk successful, such as hiring primary care doctors and buying new health IT services.

And it’s not just proton therapy, says Roades. ACOs are also continuing to invest in free standing emergency rooms, other new radiology equipment and surgeries that use expensive implantable devices. Those services are often crucial to attract the best physicians, who want to use the most advanced technology. Consumers also use technology as a proxy for quality, choosing to have procedures done in hospitals that advertise the shiniest new machines.

“It makes me wonder if people are taking this ACO thing seriously are not. Maybe they think it’s not really going to stick,” says Erik Johnson, a senior vice president at consulting firm Avalere Health. The trend calls into question “the idea that the ACO is the magical elixir that will drive down utilization,” he adds.

The problem is that the incentives in the Medicare ACO program simply aren’t strong enough to counter the draw of lucrative volume-driven care. “This is a very slow tectonic shift that Congress is trying to drive,” says Johnson. “These are baby steps.”

So even though capital investments like proton therapy centers “would be deadweight on their balance sheets” in a risk-based system, “they don’t see it happening for years to come, so there’s still time to milk the fee-for-service cow.”

7 Responses to “Of ACOs And Proton Beams: Why Hospitals ‘Live In Two Worlds’”

  1. LUTHER W. BRADY, MD says:

    6 JUNE 2013 IT IS ABSOLUTELY OBSCENE TO SEE THESE KINDS OF INVESTMENT WHEN THERE IS ABSOLUTELY NO EVIDENCE THAT PROTONS ARE A STEP FORWARD IN CANCER MANAGEMENT OVER WHAT CAN BE ACHIEVED WITH LEADING EDGE RADIATION THERAPY EQUIPMENT AND TECHNOLOGIES. THE FINAL ARBITER IS THE QUALITY OF THE RADIATION ONCOLOGIST. AND HIS/HER ABILITY TO MAKE APPROPRIATE JUDGEMENTS FOR THE BEST OUTCOME AND BEST QUALITY FOR THE PATIENT. THE INVESTMENT OF OVER $100,000,000 FOR PROTONS CANNOT BE JUSTIFIED IN ANY WAY AND ONLY SERVES TO INCREASE THE COST OF PATIENT CARE WITHOUT ANY GOOD, RATIONAL AND JUSTIFIABLE DATA.

  2. Dennis Gerber says:

    Watching the debacle take place in South Florida – and arguments over the prestige of having the Proton put in place – where very little justification on clinical cost could be shown, or of the actual outcomes being so much greater than the standard radiation path, and the narrow band of medical need patients that qualify, makes justifying this enormous cost, as self-serving, and self-indulgent. Healthcare dollars come at such a premium today and how well they are used for the general population they are intended for is critical. This program will never meet the true ACO intent, but it was never intended (as your article shows) to be part of any cost/balance program. It is the absolute egregious example of wrong time – wrong place, and poor use of the healthcare dollar. Healthcare is not about prestige – IT IS ABOUT OUTCOMES AND COSTS. Hiding it under the wraps of being a medical teaching institution, does not mask the charade.

  3. killroy71 says:

    30 years ago, hospitals had to justify the cost of a CT scanner…now there’s no limit to the medical arms race. If hospitals really cared about being cost-competitive, they’d collaborate and build one to share. But sharing seems to be anti-American or something.

  4. STipton says:

    Unlike conventional photons and x-rays, protons deposit their maximum energy into a patient’s tumor, then stop, preserving healthy tissue. The use of proton therapy reduces the amount of collateral tissue damage, side effects and secondary tumors, which ensures patient comfort, while also minimizing total treatment costs.

    For Children there is no argument that this is the only treatment I would vouch for my child to have!

    http://www.proton-therapy.org/howit.htm

    The ignorance of people about medical technology that will not only be innovated in to a more affordable but made more accesible to all people. Right now, with the centers up and the centers opening soon, we are still unable to treat all that need and want to be treated with this amazing technology!

    It is by no means new technology that is experimental or investigational. Proton beam therapy is neither experimental nor investigational. It is an established form of treatment that is widely accepted by physicians, government agencies and many insurers, including Medicare and Medicaid (which do not cover investigational or experiment treatments). The Abstracts can be found on http://www.proton-therapy.org/.

  5. Dean Sontag says:

    In every sector of the economy where there is true consumer marketplace, technology is introduced to reduce the cost of care, not increase it. The next cancer therapy that should be put in place should cut the cost of care in 1/2, rather than double it so that more individuals can access life-saving care, rather than less. Healthcare has a perverse incentive to continually escalate costs with little, if any marginal gain in quality. It is time for the healthcare system to go through a radical transformation – one that will only come through the combination of economic failure, government intervention and entities outside the mainstream medical-industrial complex that will bring disruptive technologies and care models that halve the cost of healthcare.

  6. ThinkFirst says:

    If my child gets cancer, I will insist on proton therapy. Regardless of the (biased) data published so far, less radiation into healthy tissue means a better long term outcome. As the technology continues to improve and go down in price (i.e. Mevion Medical Systems), so will the overall cost to healthcare systems and insurance providers – not to mention the reductions in reimbursement driving down costs. In fact, ask any (honest) insurer and they will tell you why they are ALL FOR proton therapy. Long term cost of health care will go down – period.

  7. CA says:

    From what I have read, there is evidence that proton beam is better for children with certain types of cancer. The problem is serving children alone will not generate a positive return on investment at our current level of technological development. So the people building these centers have to fill their centers with prostate cancer patients, for whom there is no conclusive evidence that proton beam is better than IMRT. (And as a side note, in many other developed nations, many prostate cancers are not treated at all. Depending on the aggressiveness of the tumor and the age of the patient, the cost of treatment in terms of potential side effects to the patient may be higher than than potential benefit.)

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