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4 Reasons to Wait on ACOs

Philip Betbeze, for HealthLeaders Media, December 16, 2011

Now that I've convinced you that sitting back and waiting is an option, here are four reasons you might want to wait:

1.Working two different reimbursement systems at the same time
While bigger systems may be able to spread the risk, make the investments necessary, and handle losing money for a while to develop the system architecture that they think will ultimately prevail, smaller hospitals and systems can't afford to do that. Never mind that they'd be restructuring their business to cannibalize their own biggest profit stream.

"The fact is that unless we see some drastic change in the way [hospitals] do business, we're not setting the ACO concept up to succeed," says Wendy Whittington, MD, chief medical officer at Anthelio Health Solutions, a healthcare information technology company. "For the basic acute care hospital, and there's still a lot of them, their major revenue stream is still acute inpatient care. And when you still need to making a living on that while you figure out the ACO model, it's hard to work both."

Why? Well, for example, when you're the CEO of an independent community hospital, still working the DRG system and trying to keep your beds full, how can you justify spending scarce capital on keeping patients out of the hospital? You'd be spending capital to work against yourself, and given the modest margins most hospitals live with, that would be impossible. You might start looking seriously for a partner, however.

2. Handling, and paying for, the information
The other conundrum is in the handling of the data needed for ACOs to work efficiently.

Whittington and her team do a lot of work with IT departments surrounding their participation in health information exchange, or HIE, efforts, which are critical to sharing patient information among a variety of providers who may be using different IT architecture.

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