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5 Reasons Why ACOs Could Fail

Cheryl Clark, for HealthLeaders Media, January 7, 2011

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."

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2 comments on "5 Reasons Why ACOs Could Fail"


Matt Adamson, MEDecision (1/17/2011 at 3:39 PM)
This article certainly makes valid points and there is reason for skepticism based upon a past that is filled with mistrust and a set of stakeholders who are not jointly aligned for success. However, we should not assume that the playing field will remain the same moving forward. The most influential payer in the country is the government and it has stated through legislation that funding is available to test various ACO models with the goal of making them work. CMS and the VA have already begun establishing reimbursement programs that pay for outcomes rather than volume, setting the stage for a more risk-based approach. Commercial payers will have the opportunity to take advantage of this environment and [INVALID] programs that pull from the best of these models to drive down their costs as well. There is also the opportunity to bring the payer into the ACO from a clinical standpoint by allowing them to provide data and care management resources. It is all about the incentives for providers and value-based insurance design for the patients if we want to bring alignment to the process. The EHR issue must be overcome by having those who are bearing the most risk supply the systems needed to any physician that is able to participate in the ACO. That is a hurdle that should not stop the ACO movement long term - we at MEDecision are working toward systems that could help alleviate this issue soon. Another thing in favor of the ACO is the proliferation of the medical home model that calls for care coordination to take place within the physician practice. This [INVALID]s a technical back[INVALID] where a person or group responsible for patient-centered care will have a complete view of that care for their patients and will be able to help drive them toward more clinical and value-based outcomes. If the reimbursement and incentives align with an improved technical landscape, the hurdles start to fade. I discuss many of these issues in our latest blog: Optimization of the New PCMH Neighborhood (http://www.medecision.com/blog/post/Optimization-of-the-New-PCMH-Neighborhood.aspx) – feel free to add your comments.

Stefani Daniels (1/7/2011 at 3:04 PM)
Count me among the ACO skeptics. Having spent my entire career in hospitals and having gone through every 'trend d'jour,' I can confirm that unless the economic incentive is blatantly compelling and are combined with economic consequences, getting physicians aligned with hospital goals can, after all these years, be best described as trying to herd a bunch of cats. Everyone is trying to dance around the 80 ton elephant in the room....reimbursement methodologies. Even if employed with incentive compensation packages, they still generate claim forms and are rewarded based on RVUs.....volume - not outcomes.