January 01, 2014
4 min read

Future of endocrinology: The Affordable Care Act and ACOs

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There can be little doubt that the future perspective for endocrinology is dominated by the Affordable Care Act. What will the implementation of this omnibus hijacking of the health care industry do to/for endocrinologists and our profession? Certainly, it will accelerate certain negative trends already underway in our profession and place us all under ever more severe stress. Interestingly, the safe harbor, if there is such a thing, for our profession may not be what most seem to think is safe right now. Let me elaborate.

Small practice interrupted by HMOs

For many years, endocrinologists practiced in small solo practice or in small partnerships. The small offices needed for such practices facilitated the more intimate patient encounters necessary for the effective interactions between patients and physicians, all of which lie at the heart of endocrine practice. Whether it is a detailed history and physical, or an extensive discussion of counter-productive behaviors, these encounters marked most endocrine patient interactions as either efficacious or not, depending on outcomes. Economies of scale did not become necessary to the endocrine practice until in-office laboratories and more expansive billing operations became necessary, due to the diversity of insurance paperwork that began to change the workflow in the offices of endocrinologists more than 20 years ago.

Insurance came to dominate medical practice when health maintenance organizations became successful. The central principle of the HMO industry was to “make health care more efficient.” Instead, it became an artificial cost-containing mechanism embraced by employers and governments alike. The basis for cost reduction was payment reduction to practitioners and hospitals alike. Of course, a new layer of bureaucracy was needed to handle the many forms that proliferated from the multiple insurance companies in the field, all of which required their own unique and non-reproducible forms. And so began the upsizing of endocrine practices to deal with this costly office overhead expansion necessitated by the HMO phenomenon.

Alan J. Garber

Alan J. Garber

The business side of medicine

Training programs have failed to keep pace with these changes and have largely neglected the fundamentals of business practice, which are necessary for physicians to run offices. As a result, newly minted endocrinologists are totally unprepared to deal with the realities of private endocrine practice and must largely affiliate with successful pre-existing group practices as new associates, or become employed physicians. The latter tend to work for hospitals or, more likely, medical schools, since these tend to resemble the environments with which they are familiar and which appear to be nurturing.

Nothing, however, could be further from the truth. Most employed physicians are under contracts that use resource-based relative value unit compensation and compulsory attendance at many clinic sessions per week. They are working and seeing patients at the same intensity as private practitioners, but yet, believe themselves to be “academic faculty.”

Unfortunately, the realities of medical economics at medical schools are no longer as generous as they once were, and little free time is available for research and scholarly activity unless supported by outside sources such as grants. Because new hires typically have no such sources of revenue, they must generate their own salaries by clinic operations and do little or no research. Disillusionment is often the result, and practitioners soon look elsewhere for gratification, such as in family. This is a contrast to prior generations who viewed themselves as practitioners first and often thought of patients as family.

Affordable Care Act and ACOs

The Affordable Care Act seeks to enroll large numbers of previously uninsured patients into health insurance and reduce the costs of this burden by reducing payments for care to the remaining 85% who were insured under other mechanisms now obsolete. Of course, as with other insurance-based, HMO-like schemes, the first thing to be discounted is hospital and physician services. Because hospitals and insurance companies were early supporters, they will be less affected, and practitioners will be the primary targets.


There is an interesting deus ex machina that is hoped to save this financial Ponzi scheme: namely, the accountable care organization (ACO). Like most bad ideas in Washington, nothing ever truly disappears. Instead, it is merely reborn under a new name. In this case, the ACO is the rebirth of the old capitated medical plan under which medical organizations mostly lost their shirts and the rest of their wardrobes as well. That Medicare scheme failed, taking large amounts of practitioner dollars with it. This will likely happen again with ACOs.

Endocrinology practitioners have sought to defend themselves against these developments by seeking to enroll in these ACOs and hope that reimbursement will continue at the old levels while the huge billing and compliance costs are absorbed by the ACO. This will never happen. Instead, lucrative specialties that bring in patients — such as the surgical specialties — will obtain favored treatment while esoteric non-procedural specialties such as endocrinology will be minimized. We see that happening today. Hospitals and other medical organizations emphasize top-line income growth without much attention to bottom-line cost control. For example, intensive inpatient diabetes control programs are difficult to implement in many hospitals unless a surgical champion aggressively pursues these programs and demands their initiation. Interestingly, many institutions do not use endocrinologists to run these programs but do use hospital employees such as pharmacists to manage exactly what endocrinologists should be directing. Control has always been a major objective of hospital management, and this area is no different than other areas.

Return to small practice

In short, looking to ACOs to preserve endocrinology practice is a fool’s errand much as prior medical innovation has failed endocrinology thus far. Employed physicians must be empowered to defend and protect the fundamental principles of endocrine practice without which they become nothing more than general internists. The future of endocrinology is likely to be a resurgence of small group practices as boutiques that offer services outside of the large, governmental reimbursement schemes. They will be similar to those which have grown up in the United Kingdom, in which about 15% of patients all have outside private insurance and seek their care at such sites rather than in the National Health Services. The same two-tier system will likely develop here because many individuals want the best health care and are willing to pay for it. A return to the smaller offices of old will lower overhead and enable cost-effective endocrine practice outside governmental systems.

  • Garber reports serving on advisory boards for Halozyme, Janssen, Merck, Novo Nordisk and Vivus; on speakers’ bureaus for Janssen, Merck, Novo Nordisk, Santarus and Vivus, and as a consultant for Janssen, Lexicon, Merck, Novo Nordisk, Santarus and Vivus.