More On Why The Prognosis of Accountable Care Organizations (ACOs) Is Guarded and How Should Population Health Management Providers Position Themselves

For a long time, the more than 5000 regular visitors to the Disease Management Care Blog have been aware of the gap separating the promise and reality of Accountable Care Organizations (ACOs). That's why the DMCB salutes the editors of Health Affairs, who have decided it's time to extend the same courtesy to its readership with a well written article by Lawton Burns and Mark Pauly titled "Accountable Care Organizations May Have Difficulty Avoiding The Failures Of Integrated Delivery Networks Of The 1990s."

Remember the 1990's style integrated physician-hospital delivery systems? The DMCB sure does. Like the modern ACOs, these systems' business model were also based on care coordination, incentives alignment, risk bearing, salaried physicians and horizontal and vertical organization.

According to Drs. Burns and Pauly, they flamed out because they paid physicians too much for their practices, lacked adequate information technology, failed to achieve economies of scale, couldn't coordinate care and entered into "piecemeal" capitated contracts.  Last but not least, the typical 1990's style integrated system was never really "integrated" at all: it was made up of multiple provider entities that were simply bolted together.

ACO advocates argue it's going to be really different this time. Information technology is cheaper and more robust, new payment approaches (such as upside risk and bundled payments) are more user friendly, health care administrators are more adept at squeezing costs from the system and purchasers are demanding value over volume.  Toss in patient-centeredness, accountability, transparency, paying zero for physicians' practices and the momentum of federal payment reform, and it's easy to see why ACO-skeptics like the DMCB readers are being viewed as paper-medical record-loving party-pooping pinheads who pine for fee-for-service.

For the record, the DMCB categorically denies being a pinhead. But it and Drs. Burns and Pauly agree there are plenty of reasons to be skeptical.  Among the article's points that resonated with the DMCB are:

1) Most attempts at hospital-physician integration have not ended well, thanks to conflicting goals have not achieved quality, cost, cooperation or integration. Will economics and information technology finally trump culture?  We'll see.

2) Care coordination is no less difficult compared to the 1990s because it not only relies on timely information, but patient self management and nurse coordinators. The parallel flame-out of early versions of disease management also taught us that it is not a panacea for all patients with all chronic conditions being cared for by multiple providers in open networks. It works best when it is targeted at persons with a high burden of disease with readiness to change.

3) Medical homes take years to develop, thanks to years of transformative change management. Just because you're an ACO doesn't mean you're good at it and, what's more, you don't have years.

4) Clinically-based health information technology such as point-of-care decision support, electronic records and computerized physician entry have been inconsistently successful. And that's being generous.

But the authors don't stop there.  They describe four ACO "Achilles heels":

1) If PCPs are truly the linchpin to ACOs' success, it should also be pointed out that they are in short supply. It remains to be seen if they'll welcome a loss of professional autonomy or be willing to accept compensation that remains a fraction of their specialist colleagues;

2) Assuming large integrated systems comprised of a hundred or more physicians are truly able to achieve economies of scale, they won't spontaneously appear.  They take years to develop and mature.  See medical homes above.

3) Utilization of health care services outside an ACO's network not only outside their control but is very expensive, and

4) Maybe ACOs are a "disruptive technology" but the ultimate judge will be consumers.  They have yet to weigh in.

Implications for the population health management (PHM) service providers:

1. As ACOs struggle with their primary care providers and scramble for medical home and large health system-style care coordination services, "outsourced" nurse-based coaching will be very much in demand. But you already know this.

2. Given their national footprint, PHM providers may be in the best position to assist with those out of network or out of state ACO enrollees.  That's a new thought.

3. Keep a Plan B available just in case, and despite your help, ACOs collapse of their own weight.