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Thoughts on Reform: When ACOs, Vectors, and Spin Collide

Michael Silver, PhD, Vice President, Sg2, for HealthLeaders Media, June 16, 2011

ACOs on the Road
We discussed many of these change drivers with a few hundred attendees when we took the EDGE ACO presentation on the road to Boston, Nashville, Dallas, Denver and San Diego. Based on what we heard, I have little doubt that bundled payment will emerge as a major vector during this decade. I expect that when bundled payment and episode of care models are implemented by the Centers for Medicare & Medicaid Services (CMS), United Healthcare, Blue Cross and Blue Shield and other payers, they will serve to immediately drive major changes in care delivery, provider behavior and cost structures across the entire health care marketplace.

So where does that leave that overhyped reform buzzword, the ACO? During discussions with attendees at the "ACO road show," we heard almost universal hesitation or downright rejection around participation in the Medicare Shared Savings Program as outlined in the Patient Protection and Affordable Care Act, due to its multiple unknowns and financial uncertainties.

Since CMS published its Shared Savings Program governance draft, market skepticism has clearly grown and become more vocal. In light of this, the following messages emerged from our "road show" presentations.

  • Hospitals do not need to become ACOs, but every provider organization will be expected to become more accountable for their care delivery and decisions—there was almost universal acceptance for this notion in post-meeting surveys.
  • Management and care redesign aimed at significantly reducing costs while improving quality will be essential for the health and growth of every provider organization.
  • Since the ACO concept does not include comprehensive disease-focused strategies by market, successful health systems will need to work on becoming well-integrated, high-performance, accountable Systems of CARE.
  • Robust performance and outcomes data and the ability to effectively mine and integrate that data into care decisions will be essential for dealing with payers and regulators.
  • Physician integration and alignment will be essential hospital values; however, alignment and management of those relationships will be more valuable than merely employing physicians.
  • Over the next 5 years, the most important management innovations will be found in hospital systems' ability to implement and manage pilot programs, exploring new payment and care delivery models.
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