By VINCE KURAITIS, JD

Is economic credentialing — the use of economic factors such as loyalty and utilization rates in the physician credentialing process — a potential tool for primary care physicians to lead ACOs?   and reestablish the vitality of primary care in American health care?

Keith Wright and Gregory Drutchas’ incisive article Economic Credentialing: A Prescription To Secure Shared Savings Under Accountable Care provides useful history and context about economic credentialing:

For many years, the use of economic factors by hospitals in making medical staff credentialing decisions has been the subject of much discussion and debate among physicians, groups such as the American Medical Association (AMA), healthcare providers, payors, and attorneys….the implementation of healthcare reform is likely to bring the debate over economic credentialing to the forefront once again.

While economic credentialing has been talked about a lot, it’s rarely been used.

The controversy over economic credentialing arises again with ACO’s…and this time the answer might be different — and opportunistic for primary care.

Economic Credentialing from the Hospital POV— The Big Red Button

From my personal experiences, the threat of a hospital imposing any type of economic credentialing on their medical staff has been a big red button issue — akin to a hospital declaring war on some physicians, with the risk of alienating nearly all physicians.

Management guru Peter Drucker wrote that the two most difficult organizations to “manage” were hospitals and the military. Most hospitals work hard to integrate physicians in decision making and they share a great deal of information about clinical and business issues.

Hospitals and their medical staffs are two separate legal entities with often opposing interests.  Hospitals control the details of credentialing criteria by which individual physicians join a hospital’s medical staff.

Again from my experience, most physicians just want to practice medicine.  BUT, there is always a substantial segment of physicians in a community who are entrepreneurial.  These physicians set up services that often compete with the hospital — an ambulatory surgery center, a MRI scanner, a dialysis center, a specialty hospital, etc.

During my career as a hospital exec a number of years ago, I’ve had many behind-closed-doors discussions about using economic credentialing as a way of excluding physicians who competed directly with the hospital.

But we never actually pushed the big red button. The risk of alienating the broader medical staff was just too high.

Economic Credentialing from the ACO POV

I see at least two differences between how hospitals credential physicians and how ACOs will have to credential physicians:

1. Physician Decision-making Over Economic Credentialing. In ACOs, it most likely will be physicians deciding to impose economic credentialing on their peers. Even in a hospital controlled ACO, my guess is that a wise hospital will delegate the credentialing process to a group of physicians. The hospital will not want to be perceived as pushing the big red button.
2. Economic Incentives Differ Significantly. In hospital/medical staff credentialing, physicians have no direct economic interest to protect the hospital from competition by other doctors. In ACO credentialing, physicians do have an economic incentive to assure that their peers practice effectively and efficiently and do not compete with the ACO— otherwise, the ACO might not be able to cash in on shared savings or at-risk revenues.

Wright and Drutchas contend:

ACOs will have no choice but to consider economic factors in the process of identifying, attracting, and maintaining physicians in order to qualify for and maximize the receipt of shared savings.

Implications and Opportunities

How will economic credentialing play out in ACOs?  This is a bellwether issue that deserves ongoing attention.

Many Unknowns. We haven’t yet see the Feds first draft of ACO regulations. The rules of the game are undefined.

Antitrust Protection. A central question in regulators minds (and rightly so) is whether ACOs will be used to achieve clinical integration among care providers or whether they will be used to consolidate bargaining power against health plans and raise prices.

The ACO that has an economic credentialing process will look much more like an organization that is serious about changing physician practice patterns and coordinating care. An ACO without economic credentialing will have a lot of explaining to do about what carrots and sticks are available to get physicians to play nicely together in the care coordination sandbox.

Opportunity for Primary Care Physicians? Could economic credentialing be used as a tool to restore the balance of power between primary care physicians and specialists? Is it an opportunity to revive primary care from the brink of extinction?  Dr. George Lundberg, former editor of JAMA, offered perspectives and a prescription in Brian Klepper’s new blog, Care and Cost. Lundberg writes:

Primary care physicians, including pediatricians, are usually really nice people. But old baseball fans will remember that Leo Durocher famously said, “nice guys finish last.”

He then advises primary care physicians to

Seize the vehicle provided by the Affordable Care Act called Accountable Care Organizations to implement these simple but profound ideas and RUN WITH IT.

No more Dr. Nice Guy PCPs until you do a better job of fixing our broken system.

The use of economic credentialing could change the balance of power in ACOs. In the past, primary care physicians have had very little incentive or opportunity to monitor the utilization patterns of specialists.

ACOs will attempt to optimize utilization of medical care — not too much, not  too little. Could economic credentialing by ACOs be the vehicle used by primary care physicians to control costs, coordinate care, and rejuvenate primary care?

Vince Kuraitis JD, MBA is a health care consultant and primary author of the e-CareManagement blog where this post first appeared.