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).
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?