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ACO Success Comes With Risk. Get Over It.

News  |  By Philip Betbeze  
   April 27, 2016

For some organizations, forming or joining an ACO is a tentative first step toward taking on risk. For others, it’s just one milestone in a journey toward a full-risk integrated delivery system. In both cases, the advice is consistent: Dive in.

This article first appeared in the April 2016 issue of HealthLeaders magazine.

There was a time when many, if not most, hospitals and health systems doubted that they would ever have to veer from fee-for-service healthcare and all its simplicity despite its misaligned incentives for patient health. That time seems over.

Even in states where Medicaid has not expanded, and even where employers and commercial payers aren't pushing value-based contracting, hospitals and health systems are embracing and experimenting with new models to improve outcomes.

Whether those take the form of commercial or government payer accountable care organizations, they're putting the pieces together.

But how best to undertake the journey? What are some lessons learned from those at various places on the path toward taking full premium risk, or capitation? Two organizations that have been through some challenges provide a variety of perspectives through which others can pattern their journey.

Longevity equals leadership?
If experience with value-based care equals credibility, Montefiore Health System, a six-hospital health system in the Bronx, New York, can lead others. It traces its roots in the risk business to the late '90s, when it had plenty of company in health systems that took on risk through their own health plans, often to their ultimate regret.

"We're in our 20th year of managing populations at financial risk," says Stephen Rosenthal, the health system's senior vice president of population health management. "California excepted, many organizations left the risk business in the late '90s, but we stuck it out."

It helped that they didn't really have a choice.

"When you're managing a government programs population, you don't have a lot of room for mistakes, so you spend a lot of time understanding what that population needs, particularly those who have emotional and behavioral health challenges," says Rosenthal.


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Philip Betbeze is the senior leadership editor at HealthLeaders.

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