Accountable Care Organizations - Expensive Experiments?
For all the analysis and opinion on ACOs, the fact remains that provider organizations looking to start or join this type of organization are looking at significant expenses. Management consultants, counsel, and of course the IT systems that are required to collect, report and analyze the required savings and outcomes data. The burning question is,“Will all the expense bring savings and increased quality of care”? Recent information and expert analysis seem to suggest perhaps these organizations are not the meaningful model of cost savings and outcomes many had hoped for.
The Wall Street Journal asked the following experts to comment on the topic: Donald Berwick, former head of CMS (resigned 12/2/11), Jeff Goldsmith, president of Health Futures, Inc., and Tom Scully, former head of CMS (2001-2004) and former chief executive of the Federation of American Hospitals.
Berwick contends that the formula for ACO success is simple: “keep quality high, save money by improving - not restricting care”. Goldsmith sees the model differently. “The ACO is more like asking the hungry horse to guard the granary. The major savings for Medicare are to be found by keeping people out of the hospital, and reducing the incomes of the specialists who dominate hospital politics”.
Goldsmith also shares my opinion that the ACO has a sure fire potential for costing millions in start-up costs and reducing the income of the particating providers. As Goldsmith called it, “Tom Sawyer’s fence painting project”. In addition, for all the talk of patient-centric care, providers are making the choice to be in an ACO, not the patients.
Berwick contends that patients can certainly choose any care provider; however, if patients are changing doctors and seeing some outside the ACO on a regular basis, it seems to me this actually defeats the purpose of better coordinated and monitored care.
Tom Scully contends that docs are human and like all humans, they follow financial incentives. Scully states the system would be better under a capitated systems (see bundled payments concept) in which care-management groups pay docs a comprehensive fee depending on the level of care provided for each patient. “ACOs are baby steps in the right direction - but they come with a big danger”. In this model hospitals, not doctors are driving the bus - one level removed from the level of care that is actually treating and monitoring the patient.
Interesting that capitation is mentioned (hey I remember that model! Total, partial, carve-out cap rates). WSJ asks “Does capitation work”? Berwick doesn’t go so far to say that capitation is the only approach and ACOs are a move in the direction of more consolidated payment schemes. Scully sees ACOs as a move in the right direction - however, Medicare fees are fixed regardless of quality levels and “...price fixing has never worked in any society ever”.
My question - are providers really ready to accept the risk of care coordination and savings that are inherent with Medicare’s ACO model? Those of us that watched the Physician Hospital Organization (PHO) model of the 1990s fizzle out when PHOs ran out of cash reserves have to wonder if this time things really will be different.
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