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5 Reasons Why ACOs Could Fail

Cheryl Clark, for HealthLeaders Media, January 7, 2011

A report in Health Affairs says that provider efforts to manage costs make up "a dismal history" and that accountable care organizations that try to do so are "unlikely to accomplish" their objectives.

For starters, the ACO model predisposes collaboration between hospitals and physicians who overall have not collaborated well with each other in the past, says Jeff Goldsmith, president of Health Futures and an associate professor of health sciences at the University of Virginia in Charlottesville.

"In many communities in the southern and western states, the two groups have engaged in bitter competition for control of lucrative ambulatory services, such as advanced imaging, ambulatory surgery, and radiation therapy," writes Goldsmith.

"The result has been much ill will and duplication of services. In some communities, physicians have controlled the lion's share of ambulatory diagnostic and surgical cases, to the point of damaging the local hospital financially."

How can these groups get along in a hospital-centered ACO?  It may not be possible, he writes.  Not only are there trust issues, but there's a new disconnect between most community physicians and medical or surgical services provided in a hospital. 

Instead, hospitalists and intensivists have taken over much of that role. "There is no such thing as an 'extended medical staff.' The medical staff consists of physicians who actually practice at the hospital, which is a shrinking percentage of the physicians in most communities," Goldsmith says.

Goldsmith proposes a complex alternative model that breaks healthcare services into three categories:

  • Primary care
  • Unscheduled emergencies
  • Diagnostic physician care and services from one or multiple specialists such as oncologists

Each category has different payment structures more in line with predictable risk.  But regardless whether his model – which calls for more flexibility in payment structure – is a viable one, it's unlikely that the current concept of an ACO will accomplish both improved care at reduced cost, he says.

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2 comments on "5 Reasons Why ACOs Could Fail"


Matt Adamson, MEDecision (1/17/2011 at 3:39 PM)
This article certainly makes valid points and there is reason for skepticism based upon a past that is filled with mistrust and a set of stakeholders who are not jointly aligned for success. However, we should not assume that the playing field will remain the same moving forward. The most influential payer in the country is the government and it has stated through legislation that funding is available to test various ACO models with the goal of making them work. CMS and the VA have already begun establishing reimbursement programs that pay for outcomes rather than volume, setting the stage for a more risk-based approach. Commercial payers will have the opportunity to take advantage of this environment and [INVALID] programs that pull from the best of these models to drive down their costs as well. There is also the opportunity to bring the payer into the ACO from a clinical standpoint by allowing them to provide data and care management resources. It is all about the incentives for providers and value-based insurance design for the patients if we want to bring alignment to the process. The EHR issue must be overcome by having those who are bearing the most risk supply the systems needed to any physician that is able to participate in the ACO. That is a hurdle that should not stop the ACO movement long term - we at MEDecision are working toward systems that could help alleviate this issue soon. Another thing in favor of the ACO is the proliferation of the medical home model that calls for care coordination to take place within the physician practice. This [INVALID]s a technical back[INVALID] where a person or group responsible for patient-centered care will have a complete view of that care for their patients and will be able to help drive them toward more clinical and value-based outcomes. If the reimbursement and incentives align with an improved technical landscape, the hurdles start to fade. I discuss many of these issues in our latest blog: Optimization of the New PCMH Neighborhood (http://www.medecision.com/blog/post/Optimization-of-the-New-PCMH-Neighborhood.aspx) – feel free to add your comments.

Stefani Daniels (1/7/2011 at 3:04 PM)
Count me among the ACO skeptics. Having spent my entire career in hospitals and having gone through every 'trend d'jour,' I can confirm that unless the economic incentive is blatantly compelling and are combined with economic consequences, getting physicians aligned with hospital goals can, after all these years, be best described as trying to herd a bunch of cats. Everyone is trying to dance around the 80 ton elephant in the room....reimbursement methodologies. Even if employed with incentive compensation packages, they still generate claim forms and are rewarded based on RVUs.....volume - not outcomes.