Skip to main content

ACO Lessons from Early Adopters Are Invaluable

 |  By Philip Betbeze  
   March 02, 2012

For whatever reason, if you've decided that creating an accountable care organization structure is not on your immediate wish list, you're far from alone.

Many institutions are taking a wait-and-see approach, and can afford to. Just make sure your attitude is one of learning, not active avoidance, because what first might have looked like a flavor-of-the-month is becoming a regular healthcare business staple. And contrary to popular belief, much of that transformation is coming not from government, but from private market experimentation.


Webcast: Commercial ACOs— Strategies from Early Adopters
On March 22, join HealthLeaders Media for 90 minutes of commercial ACO strategy and solutions, direct from top executives representing both providers and payers. This customizable webcast allows you to pre-submit questions to our speakers to help guide the discussion.

Sign Up Today


Recently, I authored a free impact analysis report: ACOs: Tailoring Your Own Solution, based on detailed interviews with a group of top chief financial officers. We discovered that despite a generally tepid response to the prospect of ACO creation, coupled with the small test group of institutions that have been approved for the CMS ACO structures, plenty of hospital systems are experimenting with so-called commercial ACOs.

At the basic level, these constructs are little more than traditional insurance company/hospital contract negotiations, However, there's a big twist.

Risk.

Hospitals haven't had to price risk very often in the past. Where they have, they've often relied on outside advisers for help. This has happened in situations such as mergers or capital access, but they've certainly never needed that kind of expertise on reimbursement.

The addition of risk to hospital contracting is a valuable tool for extracting maximum value from healthcare, but it's fraught with potential landmines. With risk, however, should come the promise of return, and hospitals and health systems that are ready to take it on should have a solid foundation for the future.

What resulted from my roundtable on ACOs with hospital and health system CFOs was a discussion on innovation, because what these organizations are doing is far from trying to fit into a predetermined definition of accountable care.

Instead, they're testing innovative approaches with commercial payers to reward for quality and to more closely align the pieces of the healthcare delivery chain as patients experience them.

They're experimenting with new skills necessary for their labor force to put more emphasis on total, or "population" health instead of volume. If they're not big enough, they're not only taking on risk through their commercial contracting, but taking and passing on risk through subcontracts with nursing homes, home health agencies, skilled nursing facilities—you name it.

We've said it before, but the key is aligning all of those incentives in such a way that patients' health improves, and that fewer medical mistakes and unnecessary treatments or procedures occur.

Hospitals are also exploring partnerships with local and national employers who are interested in limiting—or cutting out entirely—the payer middleman role. Finally, the bigger systems are forming alliances and acquiring physician practices, home health facilities, labs, and even other hospitals in an attempt not only to standardize, but also to increase scale and decrease healthcare's high rates of waste and inefficiency.

But these are the innovators, the first movers. Not all can afford to take on that kind of risk. That's why it's important to learn from these early adopters—what's worked and what hasn't worked—because if you haven't already, you're going to have to taste commercial ACOs.

My colleagues are presenting a pretty interesting 90-minute webcast soon that deals with these very topics in minute detail. The speakers have already taken the dive into commercial ACOs from both the payer and the provider side, and you'll find that their  insights are instructive and valuable.

I know there's still a lot to learn, but it's an exciting time to be in healthcare if you aren't happy with the status quo.  Let's see what the innovators can—and have—achieved.

Philip Betbeze is the senior leadership editor at HealthLeaders.

Tagged Under:


Get the latest on healthcare leadership in your inbox.