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Are ACOs Really Different from HMOs?

Greg Freeman, November 27, 2013

Others aren't as certain as Amerling that the road ahead for ACOs will be a rocky one. Even if they are not a complete success, ACOs won't be a retread of HMOs, says Ben Wanamaker, executive director of the healthcare program at the Clayton Christensen Institute, a nonprofit, nonpartisan think tank dedicated to improving the world through disruptive innovation, based in San Francisco.

"HMOs were a method of controlling costs with gatekeepers, and the mechanism for payment was almost exclusively fee-for-service," Wanamaker says. "ACOs seek to control costs and improve quality-something HMOs didn't claim to do-by changing the payment mechanism so that providers are going to be at risk for what they are calling quality. But most of the measures are not what I call quality measures, but process measures."

Wanamaker acknowledges that the move to ACOs is shaking up physician practices and could have some downside for doctors. The move to ACOs is bringing a rapid number of acquisitions because "he who has the largest number of members wins" in the ACO model, Wanamaker says. The income upside for a physician is less attractive to those physicians at the higher end of their experience and skill levels, he adds.

"I suspect ACOs are a bit disconcerting to some physicians who are concerned about maximizing their economic position," Wanamaker says. "We do not believe that ACOs as they are structured now will result in dramatic reductions in the cost of care, but we see ACOs doing a good job of better aligning provider and payer incentives for quality."

For the best chance at economic success within an ACO, Wanamaker says physicians should seek maximum transparency between fee-for-service and ACO patients so that they can develop clinical care processes that optimize the economic outcome. Know who is in which payment bucket, and develop clinical care protocols for both types of patient.

There might be more than one way to do the right thing for a patient, resulting in the same clinical outcome but a significantly different economic outcome for that patient, he says.

"That might sound insensitive in a way because, of course, the doctor should do the best possible thing for the patient no matter what," he explains. "But the doctor also has an incentive to make a living, and under a fee-for-service arrangement they likely will avoid some options if they can't be reimbursed for it. There are always judgments to be made."

A more optimistic assessment of ACOs comes from Joe Damore, vice president of population health management with the Premier healthcare alliance based in Charlotte, N.C., and a former hospital CEO. ACOs are entirely different from HMOs, he says, foremost because HMOs were driven by health plans and not providers.

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1 comments on "Are ACOs Really Different from HMOs?"


Robert Burden (12/2/2013 at 12:11 PM)
This is exactly what I would expect someone in his position to say. He needs to look around a bit more. There are ACO like organizations that work on a very different model than the one he discribes and are patient focused. There is more than enough waste and abuse in the system that can be better used in turn to provide all the needed care and still save this nation significant money and improve our health status at the same time. Seems like a very self-serving and uneducated article.