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ACOs Won't Work According to Clayton Christensen in the WSJ

Posted Mar 12 2013 12:00am

Clayton Christensen and colleagues published a recent op-ed piece in the Wall Street Journal explaining why ACOs won't work (see: The Coming Failure of 'Accountable Care' ). I have expressed similar sentiments about these organizations in the past. The concept was invented by the federal government and not by physicians and hospital executives who are responsible for creating and managing them (see:  Hospital Executives Search for the Formula for an Accountable Care Organization ; ;  How to Define and Reduce Unnecessary Services ). Most of these incumbents are not that interested in decreasing the cost of healthcare and generally like the status quo. Below is a truncated version of the WSJ article. I am only presenting the highlights so link to the original if you want more details:

Spurred by the Affordable Care Act, hundreds of pilot programs called Accountable Care Organizations have been launched over the past year, affecting tens of millions on Medicare and many who have commercial health insurance. The ACOs are in effect latter-day health-maintenance organizations....The ACOs assume financial responsibility for the cost and quality of the care they deliver, making them accountable to patients. With President Obama's re-election making it certain that the Affordable Care Act will begin taking full effect next year, the number of ACOs will continue to increase. We believe that many of them will not succeed. The ACO concept is based on assumptions about personal and economic behavior—by doctors, patients and others—that aren't realistic. Health-care providers are spending hundreds of millions of dollars to build the technology and infrastructure necessary to establish ACOs. But the country isn't likely to get the improvements in cost, quality and access that it so desperately needs.

  • The first untenable assumption is that ACOs can be successful without major changes in doctors' behavior....Doctors are expected to adopt new behavior that reduces the cost of care while retaining the ability to do what's medically appropriate. But the behavior of doctors today has been shaped by decades of complicated interdependencies with other medical practices, hospitals and insurance plans. Such a profound behavior shift would likely require re-education and training, and even then the result would be uncertain....
  • The second mistaken assumption is that ACOs can succeed without changing patient behavior. In reality, quality-of-care improvements are possible only with increased patient engagement. Managed care, as formulated in the 1990s by the HMO model, left consumers with a bad taste because the HMOs acted as visible gatekeepers to patient access to care. ACOs, seemingly wary of stirring a similar backlash, allow Medicare patients to obtain care anywhere they choose, but there is no preferential pricing, discounting or other way for ACOs to steer patients to the most effective providers....
  • The third and final flawed assumption of the Affordable Care Act is that ACOs will save money. Even if the pilot Medicare Pioneer ACOs—as the 32 most advanced Medicare ACOs are called—achieve their full desired impact, the Congressional Budget Office estimates that the savings would total $1.1 billion over the next five years. This is insignificant in a total annual Medicare budget of $468 billion....[Following are suggestions about how to correct this program:]
    • Consider opportunities to shift more care to less-expensive venues, including, for example, "Minute Clinics" where nurse practitioners can deliver excellent care and do limited prescribing. New technology has made sophisticated care possible at various sites other than acute-care, high-overhead hospitals....
    • Consider regulatory and payment changes that will enable doctors and all medical providers to do everything that their license allows them to do, rather than passing on patients to more highly trained and expensive specialists....
    • Going beyond current licensing, consider changing many anticompetitive regulations and licensure statutes that practitioners have used to protect their guilds. An example can be found in states like California that have revised statutes to enable highly trained nurses to substitute for anesthesiologists to administer anesthesia for some types of procedures....
    • Make fuller use of technology to enable more scalable and customized ways to manage patient populations. These include home care with patient self-monitoring of blood pressure and other indexes, and far more widespread use of "telehealth," where, for example, photos of a skin condition could be uploaded to a physician.....

The authors of this article are right on target. ACOs won't work as originally conceived for the reasons stated. I can't really add much of value to the discussion other than one observation. Don't expect any government official or hospital executive to state three or four years hence that ACOs were a failure of conception, planning, or implementation. All will be unanimous in declaring that ACOs have been a huge success. Just don't bother to look for any evidence of this declared success such as significant changes in the cost or quality of care. There are just too many entrenched interests with a stake in the current system. Most of the incentives in place will still favor more procedures and care at a higher price. Nearly all healthcare executives and professionals will state that they are supportive of change but primarily for the other guys.

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