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Accountable Care Organizations: The Promise and the Peril

By Dr. Nilesh Kalyanaraman

For the past two days I’ve been hearing what people really think about Accountable Care Organizations (ACO). The Brookings Institution and the Dartmouth Institute for Health Policy & Clinical Practice organized a two day conference on ACOs going through the issues and concerns surrounding the development.

First things first: What is an Accountable Care Organization? An ACO is an entity formed by physician groups and hospitals that join forces to improve the quality of care their patients are receiving and their overall health while bringing down costs. As a reward for achieving these goals, Medicare will give the ACO a percentage of the savings they generate based on the quality of the care delivered. Overall it sounds like a win-win situation.

So why isn’t this being done already? As many commentators pointed out at the meeting, it’s actually very difficult to coordinate care and we don’t have incentives in place to encourage this. Physicians, nurses, pharmacists and the rest of the medical team are pretty good at doing the right thing when they’re seeing a patient whether it’s in the office or in a hospital. With quality initiatives they’re getting better at doing the things they should be doing. The big problem is in coordinating care.

All too often I’ll see a patient who will tell me that they were hospitalized a month ago. This is often news to me. Ideally I would have known that they were in the hospital while they were in the hospital. Knowing what happened in the hospital would allow me to do the appropriate things in the follow up appointment that should have happened within a week of discharge. What actually happens is that I don’t know that my patient was hospitalized, what follow up medications or medication changes were made or what services were needed. My patient doesn’t follow up within seven days because no appointment was made and so when she does follow up the details of the hospitalization are just fuzzy memories.

This is the most dramatic example of a lack of coordination of care but anytime one doctor or system requires the services of another doctor there should be a coordination with the patient of what needs to get done and how to make sure it gets done properly. When care is not coordinated, opportunities are missed, care can be compromised and often costs go up because efforts are duplicated or the patient suffers a setback.

Right now Medicare and most insurers use a fee-for-service model where hospitals and physicians get paid for what they do regardless of the outcome. Physicians want the best for their patients but they’re not being paid to do that last step, to coordinate care. There are other ways to pay physicians to emphasize outcomes but since Medicare can’t change how it pays doctors at this time, they’ve come up with a model to try to align incentives for physicians and hospitals to coordinate care. Under the ACO model, groups that have operated on their own, physician practices and hospitals, have a shared mission in not only giving the best care to their patients, but also in making sure that all the pieces fit together.

Sounds great doesn’t it? Next week we’ll explore some of the challenges and concerns surrounding ACOs.

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