From The Editor | June 26, 2013

Are ACOs The Answer?

ken congdon

By Ken Congdon

Follow Me On Twitter @KenOnHIT

I recently interviewed the leaders of five Medicare Shared Savings Program (MSSP) ACOs for my June article The Great ACO Experiment. The article provides an inside look on how the program is progressing from a few participating members. I was motivated to write this story in response to the string of bad press ACOs have received in recent months. Many healthcare authorities question the viability of ACOs. While much of this skepticism is valid, some is rooted in the confusion surrounding the ACO concept itself and the ultimate goals of ACOs. There are several different ACO models, and pundits have a tendency to group them all together or confuse one type with another. During the interview process, Dr. Anthony Slonim, executive director of Barnabas Health ACO-North, LLC, delivered the following concise description of ACOs that I feel helps clarify the concept.

Think of an ACO as a big umbrella. Many programs can be plugged in under this umbrella (The MSSP is one such program). Regardless of the program, all ACOs have three basic elements in common:

  1. They aim to improve care quality and the patient experience while reducing costs.
  2. They’re responsible for managing populations of patients.
  3. They accept risk — both clinical and financial.

ACOs are basically groups of hospitals, other providers, and payers coming together to organize care around these core principles. The risk that ACOs accept can be either one-sided or two-sided. In a one-sided model, there is only upside potential for the ACO (e.g. in MSSP the ACO can share in the savings received as a result of the program). The payer (CMS in the case of MSSP) accepts all the risk of loss if the program fails. In a two-sided risk model the provider shares risk with the payer, accepting lower reimbursement if certain benchmarks aren’t achieved. However, the potential rewards for success are generally greater for the ACO in a two-sided risk model.

One of the goals of my The Great ACO Experiment article was to ensure apples were compared to apples when evaluating ACOs and their effectiveness. I feel I accomplished this goal even though the opinions on the viability of the MSSP varied greatly among the ACO leaders I interviewed. For example, Dr. Tom Lundquist, president and CEO of AnewCare Collaborative, believed wholeheartedly in the viability of ACOs, and the MSSP model in particular, as a cornerstone in the future of healthcare. Others, including Dr. Slonim, weren’t so sure. Dr. Slonim isn’t confident that MSSP, or ACOs as a concept for that matter, will be around for more than three or four years. In fact, he believes the ACO movement will likely be a stepping stone that leads the healthcare industry into the next stage of improving the cost and quality of care conundrum.

ACOs may not survive, but the concept of bringing accountability (for quality of care and cost reduction) to the provider side of the healthcare equation will. If you’re not already doing so, you need to prepare yourself for this inevitability. Health IT will be a key ingredient in this transition. Even if you don’t plan on joining an ACO today, you need to have an infrastructure in place to satisfy care coordination and performance demands. For example, a sound HIE strategy can ensure you can exchange key patient information with other providers in your area while BI and data analytics tools can help you track your organizational performance both internally and in relation to your peers. These technologies, to name a few, can not only help make you ACO-ready, they can prepare you for what’s next if ACOs fail.