5 Reasons Why ACOs Could Fail

Cheryl Clark, 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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