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ACOs Seen As Tough Sell, Despite Concessions

John Commins, for HealthLeaders Media, October 24, 2011

"They made a number of changes. They made a number of modifications. But nonetheless, the overall governance and reporting structure, the participation requirements, those remain largely unchanged," Kelly says. "As a result, for a hospital or system to put together an organization that would meet those requirements where the potential return would be greater than the cost, we think many will do the calculation and determine that, at least for now, this is not the direction they want to go down."


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Even with the concessions, Kaufman says ACOs remain fundamentally flawed because patients have "no skin in the game," and are free to go to other healthcare providers, which could bust an ACO's budget because they're held accountable for containing costs.

"The history of HMOs is if the patients don't have skin in the game, even though they know they are a member of the HMO and their primary care gatekeeper is a member of the HMO, if they don't have penalties for leaving the network, 20% to 30% of their care seems to get provided by out-of-network providers," he said.

In addition, he noted, hospitals that try to establish ACOs could risk alienating their specialists, who stand to lose when ACOs succeed in reducing hospital admissions.

"My advice to my clients is the best thing that could happen to them would be that their competitors do an ACO," he said. "Because the upfront investment in infrastructure will deplete their capital and then the political capital that they will have to invest to convince their specialists to participate in a program that potentially could reduce the specialists' revenue is going to drive the competitor's specialists to your hospitals."

Another problem, many observers say, is the sheer number of healthcare reform initiatives already underway, or soon to be launched. These include bundled payments, ICD-10, meaningful use, and value-based purchasing. All of this change is coming during a weak economy, with gridlock in Washington, DC, and with the possibility that the Affordable Care Act could be repealed if a Republican wins the White House in 2012.

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2 comments on "ACOs Seen As Tough Sell, Despite Concessions"


Tim Richardson (12/1/2011 at 8:10 AM)
Since patients can directly access any provider, including sub-specialists, under ACOs many will attempt to claim that they are providing "primary care" for certain high-risk populations: Endocrinologists may try to become the primary care provider for diabetics. Physiologists may try to provide "primary care" for older people and Orthopedic or neurosurgeons may try to provide 'primary care" for people with arthritis. Tim Richardson, PT http://www.PhysicalTherapyDiagnsosis.com

Jennifer N (10/25/2011 at 11:18 AM)
Since ACOs are a hard sell, they must prove to be a financially sound opportunity. They should reflect a model that will allow patients to understand that a hospital cares about not just their bottom line, but most importantly, their health. In hospitals, ACOs may be implemented by C-level execs and medical directors...but from the patient perspective, accountable care is delivered through the face of the care [INVALID] the physician. Therefore the physician must represent the ACO movement in a positive light in order for them to be integrated and successful. Many physicians are not yet on board with all ACO models, so providers implementing the models will have to first realize that they need their physicians to be in agreement that this will benefit their patient community. I saw a great video from OptumInsight that explains the importance of physicians being on board with ACOs: http://ignite.optuminsight.com/archive/physician-risk-sharing-video/