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Meeting the Future Challenges of Building ACOs

Janice Simmons, for HealthLeaders Media, April 22, 2010

As surprising as it may sound, accountable care organizations do not represent a significant paradigm shift in American healthcare: Instead, they are a compilation of "integration tactics" that have been tried at different times and in different systems, according to a new study from the Deloitte Center for Health Solutions.

Overall, the success of ACOs will depend on how well providers, payers, and patients navigate the "challenges that limited the effectiveness of previous integration and accountability efforts," according to the study, "Accountable Care Organizations: A New Model for Sustainable Innovation."

In the healthcare reform legislation signed last month by President Obama, any pilot ACO program will not take effect until January 2012 and initially will be targeted at Medicare beneficiaries. The exact specifications of an ACO will be left to the discretion of the of the HHS Secretary—using the demonstration project to determine what structures and processes work best and for which region of the country.

A functional ACO should include, however, at a minimum primary care physicians, specialists, and usually a hospital; it also should have the ability to administer payments, set benchmarks, measure performance, and distribute shared savings.

Any group of providers that can administer payments has the potential to become an ACO, according to the report. This includes hospital/medical staff organizations, academic medical centers, and proposed collaborations between health plans and providers.

They can further be divided into: 1) integrated Health systems; 2) multi specialty groups; 3) independent practice associations (also referred to as interdependent physician organizations); and 4) physician hospital organizations.

To move forward, though, four challenges will need to be addressed:

Physician buy in. The American Association of Family Physicians, the American College of Cardiologists, and the American Medical Association have stated their support for payment reform—specifically for ACOs. However, considerable physician opposition is likely to arise if an adequate physician business case cannot be made. In particular, physician groups may resist capitation and penalties that put physicians at risk—which in turn could decrease the ability of an ACO to reduce overall healthcare costs.

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