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Accountable Care Organizations: The Promise and the Peril (Part 2)

By Dr. Nilesh Kalyanaraman
. 1 Comment(s)

Last week I wrote about Accountable Care Organizations (ACOs) which are entities formed by physician groups and hospitals to improve the quality of care their patients receive and their overall health, while bringing down costs. I discussed the potential benefits of ACOs including improved health, increased coordination of care, and decreased costs. Today I’ll discuss some of the concerns that were raised at a conference about ACOs in Washington, DC last week.

One of the concerns voiced at the conference was that the cost of starting an ACO would be prohibitive for many groups. In order to coordinate care and generate savings, doctors and hospitals would need to integrate their electronic health records, ensure that they are meeting and monitoring their progress on sixty five different quality measures, and have the proper regulatory and legal structures in place. All this costs money and the numbers being talked about at the conference were in the $1.5 - $2 million dollar range. In order for that money to be worth it, the participants would need to be fairly confident that they would make that money back in savings through the ACO. They would also need to find that kind of money lying around, which is a hard thing to do these days as everybody tightens their belts. The consensus was that the biggest players would have an advantage in getting startup money, leaving smaller physician groups and systems standing on the sideline.

Another issue is that employers are concerned about transparency and privacy. In order to make coordination possible within an ACO, lots of data about individual members has to be shared between insurers, doctors, hospitals and Medicare. Making sure that patients know who is getting their information and what is being done with it is critical to the success of the ACO program. The reason employers are so concerned is that since they select the plans that their employees can choose, they want to be sure that their employees are protected and satisfied.

Another interesting point that was brought up was that ACO contracts will be predominantly in insurance plans that are PPOs rather than HMOs. PPOs give patients a lot of choice and freedom in selecting which types of providers they see. This choice costs money and provides virtually no improvement in outcomes. HMOs on the other hand, have been better at coordinating care over the years. In fact, that is how they control costs and allow for cheaper plans. It’s an interesting point that PPOs see the cost savings in practicing more like an HMO, and this jives with my initial impression that an ACO is essentially a voluntary HMO.

The final speaker of the day was Dr. Richard Gilfillan, the director of the Innovation Center at the Centers for Medicare & Medicaid Services. His message was simple: improving health is a process. In discussing the goals of the ACO program and other initiatives to improve care and decrease cost he repeatedly emphasized that input from the medical community, physicians, insurers, states and others is essential in constantly adjusting these initiatives to better serve our patients.

This is a message that we would do well to remember, that ACOs are not the solution, they are simply the next step in improving our health care system and they’ll be as good, or bad, as we want them to be.

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  1. Jan

    My daughter is a high-risk surgery OB/GYN with her own multimillion-dollar business, employing 35 trusted, hand-picked employees. She is concerned that ACO rules will:
    1. subjugate her business practice and management to a larger organization who dictates practice rules to her, and limits the number of patients she can see in a day, thus making her lose control over her own clinic's quality of care and capping her earnings.
    2. Have to do the above because she does not have $1.5-2 million of cash lying around to be her own ACO
    3. Not have the time to take in her busy schedule to effect all the necessary paperwork or hire others to do it for her.

    Can someone please address these issues? What is a small business practice to do...

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