Much attention, deservedly, has been paid to the final accountable care organization rules released by CMS last week. My colleagues (mostly) and I (very little, so far) have expended plenty of time and effort breaking down the final rules and the consensus is that they're much more attractive to providers that in their previous iteration.
You can read a few unvarnished opinions from some of healthcare's most influential voices. However, many of these leaders also say that the revised rules still don't clear the hurdle to the degree that it's suddenly desirable to take on the investment risk necessary to go down the path of a Medicare ACO.
They fear change. They fear taking on risk. And perhaps most importantly, they fear that ACOs will represent another failed payment experiment from the federal government.
Perhaps healthcare leaders are also worried about their survival under any reimbursement scheme that has been so often revised and retooled. In some cases, early adopters have fared poorly from an ROI perspective.
But those are side issues. The fact is that many hospitals, especially of the standalone kind, will never be able to make a successful go of creating accountable care organizations under their current structure.
They can't survive while the inevitable problems with underfunding and patient and physician mobility are addressed—if they ever really are. Even the big systems, possessing contractual expertise, and the pieces of the care continuum under their ownership or contractual control, are concerned that ACOs, at least the government's version, have easily identifiable land mines that could render the experiment insolvent from their point of view.
Never mind that significant investments are necessary to even begin to participate in ACOs. Will that money and effort pay off? It's certainly not clear that it will. So thank you, they say, for listening, but we'll still pass.
Smaller hospitals and health systems may have little hope of gathering the necessary firepower to take on risk, especially when patients—and physicians, according to the revised rules—can move in and out of the system to provide and obtain care. That's a problem, again, for the big systems. The problem for the smaller ones and the standalones is that they can't even afford to obtain the size and scale necessary to make a real effort at ACOs.
It's these organizations that are really at a crossroads at which either path seems treacherous. Clearly, reimbursement is moving in the direction of accountability, whether through government payers or commercial ones. Should healthcare leaders decide to stay the course, and not participate in ACOs or other risk-bearing contracts—and above all, stay independent--they might face a slow march toward oblivion. Their concern is that the trip may be much quicker if they decide to try ACOs.
So, what we have left is consolidation. Many standalone hospitals are attractive targets for larger systems that have the firepower to survive an expensive, uncertain experiment. Others aren't. This is no fantastic revelation, however, it's easy to imagine leaders at these organizations whistling through the theoretical graveyard, and hoping it might all just go away.
This is a fight for survival, even if survival means being taken over by bigger, better funded organizations that can afford to make mistakes. ACOs are a great common-sense idea. But most leaders can't afford to blow up their current business model in order to try something that might sign their organization's death warrant.
Philip Betbeze is the senior leadership editor at HealthLeaders.