Accountable Care Organizations: The Good, the Bad and the Better Thanks to Health Affairs

In a prior post, the Disease Management Care Blog not only explained, but got all mushy over the notion of ‘Accountable Care Organizations” (ACOs). The DMCB felt that ACOs could provide the endoskeleton over which a mix of carve-in and carve-out population-based systems of care - including commercial disease management - could be assembled.

ACOs may be a healthcare policy golden-boy, but the Health Affairs Blog has a posting authored by Jeff Goldsmith that argues the concept is simply not ready for prime time.

The Bad: Jeff Goldsmith notes the ACO concept was born when policy makers realized that many community physicians are loosely organized around hospitals anyway. So, the thinking went, it shouldn’t be too hard to devise risk-based incentive payment mechanisms to nudge these nascent ACOs into coordinating care. Dr. Goldsmith disagrees. He says we saw this bad movie before back in the 1990s when hospitals snapped up physician practices like brides grabbing gowns at Filene’s. Payers didn’t like their closed networks, their internal controls were atrocious, they couldn’t manage risk contracting and the administrators knew about as much about running ambulatory-based clinics as Barney Frank’s dining room table. What’s more, Dr. Goldsmith charges, once they failed, single-specialty physician groups had learned to integrate, leading to local monopolies that are still present in many U.S. cities. Even though things are different ten years later, physicians are still unlikely to play nice across specialties, the proceduralists have cherry-picked the remunerative patients for their own surgi-centers and the Generation X physicians are more likely to trump kayaking over the after-hours call it would take to make ACOs a success.

Aaron McKethan and the famous Mark McClellan have a different take in separate post.

The Good: They like ACOs and think they have a decent shot at success thanks to a wider range of more sophisticated payment options such as upside risk or quality-based payments. What’s more, since ACOs are just starting out, it should be possible to experiment and to see what works best. As for Dr. Goldsmith’s criticisms, ACOs may be just the ticket to bridge the physician-physician and physician-hospital divides, there are physician leaders that can make this work and today's information technology is much better compared to the 1990s. Indeed, they point out that there are some anecdotal reports of success emerging from the ‘ACO Learning Network,’ (hm... the DMCB Googled that one but found very little), various State-level reform efforts and, last but not least, the Medicare Demos. Last but not least, if the ACOs can also figure out how to motivate their patients toward better self-care, it won’t be a rerun, it could be a hit movie.

The Better: The DMCB points out that the consolidation of specialty physician groups could actually work in favor of ACOs; rather than deal with multiple small physician groups, getting buy-in from the big cardiology group would not only be administratively simpler, they’d be less likely to feel victimized by take-it-or-leave-it contracting. What’s more, if organized correctly, ACOs are more, not less likely, to help Gen X physicians stick to their precious 35 hour work week. The DMCB likes the point about role of physician leadership and thinks there are a whole new generation of MD-MBA-MHSAs that are up to the task.

Last but not least, when it comes to patient support services, savvy ACOs will be far less likely to insist on a 100% ‘own’ strategy if they can buy a better product at lower cost. That and the experimentation mentioned above will lead to exciting new models of care that incorporate the best of HIT, decision support, registries, disease management and the medical home.

The only downside? ACOs control of the local hospital(s) and physicians could tempt them to act like a regional monopoly. While the DMCB can be suspicious about government regulation, much work remains on crafting the kind of checks and balances that assure that ACOs translate their efficiencies into competitive and not predatory pricing.

(There's lots more on Accountable Care Organizations here)