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ACO’s – If They Fail, Here’s Why.

Posted Aug 23 2011 10:12pm

Posted on | August 23, 2011 |

Health Policy expert John Iglehart recently wrote, “One of the few major provisions of the Affordable Care Act (ACA) with solid bipartisan support establishes a new delivery model: the accountable care organization (ACO). Congress directed the Department of Health and Human Services (DHHS) to develop an ACO program to improve the quality of care provided to Medicare beneficiaries and reduce its costs while retaining fee-for-service payment. Under this program, medical groups would have to take responsibility for achieving these goals and would share in any savings derived by Medicare.” (1)

Elliott Fisher, who has been credited with creating the label ACO, is uncertain about their future. He says, “Whether ACOs achieve their ambitious promise remains far from certain …The notion of accountable care has broad appeal. But only a robust, comprehensive, and transparent performance measurement system can reassure the public, physicians, hospitals, others who deliver care, and payers that ACOs are worthy of the name.” (2)

Of course, such performance presumes a knowledge of what measures matter. Given that, you need organizational capacity, real time data, and a reliable 24/7  service continuum.(3,4) And this requires a strong backbone of electronic medical records. It also requires a workforce tilted to primary care according to University of Maryland’s John Kastor. “The concept presumes that the professionals and hospitals (in ACOs that include both) will work together closely ideally, as single governing units.”(3)

With ACO’s about to launch into a three year trial on risk sharing, health policy experts Sara Singer and Stephen Shortell recently weighed in on what could go wrong.(5) Here are just 10 items that are at the top of their list:

1. Overestimation of Ability to Manage Risk.

“This is perhaps the major lesson to be drawn from the experimentation with capitated managed care in the 1990s. Organizations frequently overestimate their abilities, particularly when potential rewards are at stake. Some physician organizations have the ability to manage and measure ambulatory care. Some hospitals have the ability to manage and measure inpatient care. But the Medicare shared savings program and many private payer demonstrations require a single risk bearing entity, the ACO, to manage the entire care continuum.”

2. Overestimation of Ability to Use Electronic Health Records.

“Implementation of electronic health records will be more challenging than most believe, despite financial support offered by CMS and others. Most clinicians are inadequately trained and supported in the use of electronic health records.”

3. Overestimation of Ability to Report Performance Measures.

“Experience with pay-for-performance programs suggests the challenge of collecting, analyzing, and reporting performance data. For most ACOs, reporting capability will evolve slowly over time.”

4. Overestimation of Ability to Implement Standardized Care Management Protocols.

“For protocols to work, clinicians must be substantially involved in their development, data must exist to assess protocol implementation and outcomes, and the protocols must allow for tailoring to individual patient needs and preferences.  This takes time.”

5. Failure to Balance the Interests of Hospitals, Primary Care Physicians, and Specialists.

“Historically, relationships between hospitals and physicians often have been strained. Participants may view ACOs simply as an opportunity to achieve greater market power rather than to improve the overall value of care delivered.”

6. Failure to Sufficiently Engage Patients in Self-care Management and Self-determination.

“Patients and family members can provide considerable care particularly in managing multiple, complex chronic conditions. Patients need to be both considered a key part of the care team and educated about taking responsibility. Many potential ACOs have little experience with this degree of patient engagement.”

7. Failure to Make Contractual Relationships With the Most Cost-Effective Specialists.

“Unlike primary care physicians, specialists are not required to limit their activity to a single ACO. Nor are patients confined to a single ACO. Thus, referral relationships become critically important to overall ACO performance… Entrenched relationships with high-cost specialists will be a stumbling block for some ACOs.”

8. Failure to Navigate the New Regulatory and Legal Environment.

“Compliance with new regulatory requirements will require unprecedented levels of transparency and cooperation among hospitals, physician organizations, and payers.”

9. Failure to Integrate Beyond the Structural Level.

“Structural and contractual mechanisms may be in place to provide more coordinated care, but ACOs may lack the change management and implementation skills…Improvement will require engaging a wide spectrum of health professionals in the change-management process and aligning shared interests and rewards.”

10. Failure to Recognize the Interdependencies.

“Overestimating an organization’s ability to manage risk (the first mistake) will be exacerbated by the other mistakes, particularly the failure to implement electronic health records, which will affect the ability to develop and report performance measures and will result in less learning from feedback.”

As for me, one piece of advice after 30 plus years at this, successful new delivery models require two things – patient support and physician support. It is unclear, at this point, that ACO’s have either.

For Health Commentary, I’m Mike Magee
References:

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