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5 Reasons Why ACOs Could Fail

Cheryl Clark, for HealthLeaders Media, January 7, 2011

3. Lack of patient incentives
There's no requirement for patients to be actively involved in joining an ACO. Rather, they'll be affiliated with such an organization "probably based on the affiliation of their primary care physician" and will probably have no incentive to cooperate with strategies to reduce cost.

4. Cost management confusion
Providers lack actuarial or insurance expertise, and so are unlikely to be able to successfully manage health costs of a population. 

5. Cost shifting
Physician markets will continue to be consolidated through hospitals' acquisition of practices, forcing private insurance costs higher through cost-shifting.


Cheryl Clark is senior quality editor and California correspondent for HealthLeaders Media. She is a member of the Association of Health Care Journalists.
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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.