ACO Hurdles, Risks, Could Dampen Provider Enthusiasm

John Commins, May 11, 2011

Under proposed rules set down by the federal government for accountable care organizations, providers won't know who their patients are until they're through the first year of the new care delivery model. In addition, those anonymous ACO patients may seek healthcare anywhere they want. If they run up a healthcare bill somewhere else, their ACO is still responsible for the cost.

And those downside risks could be considerable when ACOs enter the "two-sided model" in their third year of operations. A report from PricewaterhouseCoopers shows that two-sided ACOs with 5,000 beneficiaries could earn as much as $1.3 million for generating savings of 5%, but could also be penalized $420,000 for cost increases of 5%. For ACOs with 60,000 beneficiaries, that incentive payment for 5% savings would be around $15.6 million, while the penalty for a 5% increase in costs would be $5 million.   

With those kinds of numbers in play, some healthcare executives are openly skeptical about the benefits of joining a highly complex, untested, and potentially punitive healthcare model that prevents them from controlling – or even identifying – their patients.

"I think they are going to have to modify the rules. That's what we're hoping for," Dan Wolterman, president/CEO of Houston-based Memorial Hermann Healthcare System, told HealthLeaders Media. "Most entities out there in the U.S. are not a Mayo Clinic or Geisinger (Health System), where you have large groups and hospitals integrated for years. Most of them are like us, community hospitals, teaching hospitals, dealing with a lot of private practice physicians trying to move this thing forward."

John Commins

John Commins is a senior editor at HealthLeaders Media.


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