Sunday, November 13, 2011

Planning for a Post-ACO World

The great Wayne Gretzky once famously observed that he achieved ice hockey prowess because he made a habit of skating to where the puck was going, not where it is.  That important lesson may have been lost on countless health care executives who, now that the Department of Health and Human Services has told us what an "Accountable Care Organization" (ACO) is, are furiously skating to fill out this application.

The Disease Management Care Blog suggests they also think about where this ACO puck could go.  Listen to the ACO zealots and its easy to believe that the triple aim will become manifest and providers will rolling in shared savings moolah in less than 18 months.

Regular DMCB readers know better.  They know that Medicare's ACOs have no track record and that the ACO-like models have had a checkered experience.  As data on the Medicare's ACOs come in, it is quite possible that we may discover a penalty box where a) shared risk translates to shared losses, b) the Feds are fickle partners, c) the correlation between cost inflation and quality is implacably positive and d) only a few hospital-physician alliances have the kind of non-generalizable culture necessary to make ACOs financially viable.

In other words, this is not going to be a preordained power play. By the time they get there, ACOs could find the puck went somewhere else. 

The DMCB humbly suggests that that somewhere else could be a post-ACO world.  That’s why the DMCB suggests that no organization’s long-term ACO strategic planning is complete without serious contemplation of why they should not follow the herd and plan on a 3rd quarter where:

The Bubble Bursts?  The hangover of lost millions in misallocated capital and human resource investments could preoccupy key partners and hobble lead competitors for years to come.  This has important implications for future business relationships, mergers and acquisitions and growing market share.

The Ascendancy of Physician Groups.  As hospital-physician arrangements unravel, the larger  independent physician-owned practices left behind could fill the vacuum with an array of contained, discreet and non-global commercial insurer payment arrangements that are based on 1) a level playing field and 2) what both sides value.  That is, of course, assuming these practices don't run afoul of any market dominance scrutiny by the FTC.

Federal Retrenchment:  Despite any prior deals on the SGR, a perfect storm of entitlement non-reform, rebounding cost inflation and the lack of any new innovative ideas forces CM to cut rates. The impact on physician participation in Medicare is anyone’s guess, but the new urgency to control costs means physicians will 1) have one more business reason to seek the efficiencies of larger groups and 2) be even less willing to take on additional practice costs that ranges from hiring to technology.

Should provider organizations skate toward this post-ACO world?  The DMCB suggests it's not unreasonable.  Time will tell if they win this game.

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