Month: April, 2011

Prevention and Accountable Care Organizations

In 2012, Medicare is scheduled to implement physician payment reforms to enhance primary care and encourage the formation of Accountable Care Organizations that will manage sizable groups of Medicare beneficiaries’ lives. These ACOs will also include hospitals with fees based upon a formula of cost reductions and quality care results. This will be quite a change from the traditional fee-for-service payment model. Once Medicare gets this ball rolling, the private insurance companies will quickly do the same.

Prevention including annual medical exams, screenings and other diagnostic tests are expected to become routine for everyone in these ACOs by 2014. What is unclear is the role of fitness, nutrition and wellness services in this business model and who is best able to provide these services and at what cost. While physicians clearly understand the benefits of fitness, nutrition and wellness services to improve their patient lives and reduce their demands on the system, current legislation fails to specify a role for this important aspect of wellbeing in the new healthcare business model.

Consumers value what they pay for and clearly the explosion of the health and fitness industry over the last two decades speaks for itself. What has not happened is the focus on improving community health through a wide-scale effort including all the major stakeholders: schools, businesses, healthcare and public institutions. If society is really going to reduce our soaring healthcare costs while improving health, prevention in all forms must be the front-line defense.

For most of my professional career, I have been involved with shaping a new direction for healthcare, which includes medical fitness and wellness as part of hospital services. During those decades, I have experienced the consolidation of healthcare through hospital mergers, physician acquisition and the rapid expansion into convenient ambulatory care centers. The medical fitness industry has continued to grow during this period.

However, for the next generation of medical fitness services to be embraced, these services will need to be:

  • Covered by private health insurance and Medicare/Medicaid
  • Premium reduction and tax incentives for companies that incorporate these programs into their benefit programs

In addition, there will need to be financial incentives for building ACOs and for the physicians and hospitals that participate. Today’s model is one of reimbursement for disease – not financial reward for health. Without a well-planned transition, it will be initially too costly to make this transition.


I believe that every ACO will need a network of medically affiliated fitness and wellness centers with certified and trained teams delivering the latest in exercise and nutrition science in environments that also combine rehabilitation and conditioning services. These centers will have to have a complicated business model based upon a capitated annual rate as well as market-driven ancillary businesses. They will be a lot different from the current landscape of small, local fitness clubs and the Ys based upon their complex staff mix, policies and processes, integrated communications strategies and branding. They will