According to one of our physician columnists, the pharmaceutical industry should begin dealing with Accountable Care Organizations that work with large integrated doctor and hospital groups to improve the quality and value of care for patients.

Regardless of who won the Presidential election, the shifts in health care delivery and payment systems are already moving forward and it is unlikely that things will change course. Health care providers realize that with shrinking reimbursements there is strength in numbers and have merged into large groups. In addition, stakeholders have recognized that the fee-for-service model is increasing health care spending without a good return on investment and have already starting using different reimbursement models.

Accountable Care Organizations (ACO’s) are growing across the country and represent a major shift in the way health care is delivered and reimbursed. In an ACO, groups of doctors and/or hospitals work together to care for a population of patients. They are reimbursed not by procedure, test or CPT code, but rather in a fixed amount based on the patient’s diagnosis. If they improve quality of care at a lower cost, they keep some of the money saved. This may sound like managed care 2.0, but the difference is that it’s the doctors and hospitals who stand to benefit or lose, not the insurance companies.

Managed care did not work well because there are only so many corners you can cut when dealing with the complexities of human beings and disease. If they are going to provide better care at lower cost, doctors and hospitals must improve the process for caring for populations of patients, rather than just managing costs. One model that has been used to accomplish this goal is the Patient Centered Medical Home (PCMH). In a PCMH, a physician and a team of allied health professionals manage and coordinate a patient’s care in a comprehensive way. In both ACO’s and PCMH’s, teams of health care experts must work together to achieve the best outcomes at the lowest possible cost. This is where pharma comes in.

Unlike the insurance companies who were mostly interested in negotiating the best price for a specific drug while doing whatever they could to maximize the use of cheaper generic medications, ACO’s and the PCMH’s they work with will recognize that certain patients get a better value out of a branded product, even if that product costs more up front. For example, an insurance company would want a diabetic patient to use generic products first, including sulfonylureas (drugs used in the management of Type 2 Diabetes). Physicians running ACO’s will realize that sulfonylureas, though inexpensive, increase hypoglycemia and weight gain and can lead to adverse events including Emergency Room visits and hospitalizations, which are costly. Working with pharmaceutical companies, ACO’s might be able to reduce the out-of-pocket expense to the patient for certain branded diabetes medications that could improve adherence and reduce adverse events, ultimately leading to the enhanced quality and reduced costs that ACO’s are looking for. In addition, patient education about their disease and how to manage it will also increase adherence. Pharmaceutical companies have an expertise in this area and could truly partner with ACO and PCMH teams, as their goals would be more aligned.

The insurance company is often the barrier between the physician and the pharmaceutical industry, which are both looking to optimize patient care. In these new models of health care delivery and reimbursement, where physician and hospital organizations assume more risk and are rewarded for providing high value care, pharma becomes a potentially important ally. Since this process is already underway, the pharma industry would be wise to consider programs that work with large integrated doctor and hospital groups in an effort to improve the quality and value of the care that patients receive.

  • Matthew Mintz, M.D.

    Matthew Mintz, MD, FACP, is Associate Professor of Medicine and Director, Premier Access and Executive Services at The George Washington University School of Medicine in Washington, DC. Visit his blog at


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