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.
Here are the five major obstacles for ACOs, which could cause them to fail:
1. EHRs
The vast majority of physicians still do not have the sort of electronic health record systems that many established group practices, like the Geisinger Health system, "use to manage non-hospital care across their patient populations." Despite financial incentives from the Health Information Technology for Economic and Clinical Health (HITECH) of the American Recovery and Reinvestment Act of 2009, "it remains to be seen how much of this technology gap can be bridged, and how soon," and it may take five to 10 years before these systems measurably change how care is delivered.
2. Income redistribution
The rewards for having an ACO, a share of savings if the providers reduce Medicare cost escalation, "are grafted on top of a payment system that still rewards individuals for increasing the volume of clinical services," Goldsmith says.
High-earning specialists, particularly surgeons and those providers who rely on revenue from advanced imaging, "have far more compelling incentives to keep their volumes (and incomes) up than do primary care physicians, psychiatrists or diagnosticians who use less sophisticated technology," Goldsmith says.
A major hurdle is the fact that many high-earning specialists have consolidated into single-specialty practices precisely to resist attempts to make them share or redistribute their income. "These single-specialty groups –which ACOs will find as hard to absorb as gravel in the digestive tract, generally did not exist when the first wave of independent practice associations, provider sponsored organizations and other risk-sharing enterprises were created."
3. Lack of patient incentives
There's no requirement for patients to be actively involved in joining an ACO. Rather, they'll be affiliated with such an organization "probably based on the affiliation of their primary care physician" and will probably have no incentive to cooperate with strategies to reduce cost.
4. Cost management confusion
Providers lack actuarial or insurance expertise, and so are unlikely to be able to successfully manage health costs of a population.
5. Cost shifting
Physician markets will continue to be consolidated through hospitals' acquisition of practices, forcing private insurance costs higher through cost-shifting.