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ACOs' Real Test Will Come with Two-Sided Risk

Philip Betbeze, for HealthLeaders Media, July 13, 2012

The announcement earlier this week that 89 ACOs have been chosen by CMS to serve the healthcare needs of some 1.2 million Medicare beneficiaries is important—but not because it reflects a validation of the process by which the government hopes to get better value for the dollars they spend on Medicare beneficiaries. It doesn't. The news also doesn't reflect a validation of the contention that routing patients through so-called accountable care organizations will save money. It might. Finally, it doesn't mean that the "baseline," on which cost of care growth will be measured (which is yet to be determined, by the way) will be able to balance the reward for cost-limiting with the risk of joining the program.

The ACO announcement is important because it shows willingness by a large percentage of organizations to change their work patterns in order to find ways to better coordinate care for their patients. It's an important first step in an industry that has never had to be judged on results.

In that way, the notice to the 89 is sort of like a college acceptance letter. Great work so far. You got in. Now the real work begins.

The program has proved enticing enough that a large group of providers are willing to join, and that's a good start. But let's not fool ourselves that by signing on with this initial ACO demonstration, providers are enthusiastically looking forward to taking risk on patient outcomes. Because the fact is, most of them aren't taking much risk.

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1 comments on "ACOs' Real Test Will Come with Two-Sided Risk"


Arun K. Potdar, MA-Health Care Mgmt. (7/15/2012 at 11:17 AM)
Philip Betbeze has accurately dignosed the problems ACOs will encounter. Looking at the premise upon which the ACO concept was designed reminds me of bygone days of Staff Model Group Health Plan. When I joined the plan in late eighties it had 165,000 members. In two years it went under with migration of members to Mid Atlantic PPO plan. Controlling patients' choice to a fixed group of care givers had failed miserably. There are two factors responsible for this. First, Physicians by training personality are loners and rarely work together as a team unless it is major project that would bring everyone a Nobel Prize. Second, the leadership in Case Management will be the weakest link in the chain. Ask any senior manager about it if they had worked in a large group practice. It is not clear how the savings will be shared and that again like formulae for profit sharing of a group practice, will have frictions. Patients themselves are driven by outcomes and bedside manners. Any one disappointing member or factor will take them out of ACO. As correctly pointed out in this article; without the risks ACO will have "nothing to lose" attitude. Unless a major paradigm shift in which existing culture of individualistic physician services without sharing, is replaced by a cooperative and team working and coordinating mindsets, ACOs will not give desired savings and will fall apart like the Staff Model HMOs of the past.