Taking stock of ACO launches

Jan. 27, 2015

When the concept of “accountable care organizations” (ACOs) emerged as an extension of President Obama’s healthcare reform initiative and at the core of the Affordable Care Act, industry observers offered mixed reviews. On the one hand, some hailed the development as the logical next-generation improvement to “integrated delivery networks” (IDNs) that emerged during President Clinton’s healthcare reform initiative in the 1990s. On the other hand, some also sniped that ACOs were nothing more than a new acronym painted over the old one, with some additional regulatory nuances and rules and maybe a re-emphasis on clinical performance and patient satisfaction to justify the update.

Either way, the numbers of ACOs in operation are comparable to the numbers of IDNs before them – excluding those organizations with more creative and looser definitions of IDN. There may be between 5,800 to more than 6,000 hospitals in operation, depending on the data source, but the number of self-defining and professing ACOs and IDNs is nowhere near growing beyond the three-digit range.

If ACOs are as important, if not more important, to healthcare reform, population health and patient satisfaction measures as IDNs were supposed to be, then why aren’t there more of them and why aren’t they dominating the healthcare management landscape in the ongoing quest for effectiveness and efficiency?

Further, what are some of the noteworthy lessons healthcare organizations can learn from those “first-mover” ACOs and those pursuing other opportunities?

Health Management Technology pressed several industry experts for their observations and impressions.

HMT: In what specific ways have ACOs improved clinical and financial operations for a healthcare organization as well as for population health initiatives?
Andrew Mellin, M.D., Vice President, Medical Director, Connected Care & Analytics, McKesson

Mellin: The ACO model has put in place the structure to focus on patient value first and foremost. In the fee-for-service world, many well-intentioned quality initiatives were not financially viable for health systems. For example, a health system executive told me a few years ago that if he continued to expand a highly successful congestive heart failure (CHF) readmission program, he would be put out of business as it would result in a substantial decrease in the census of his hospital. The ACO model has allowed organizations to successfully invest in programs focused on patient outcomes and patient experience, ranging from implementing care management programs to creating provider transparency around quality to using analytics to uncover cost and quality variations in provider practice patterns. By embracing the ACO concepts, we have seen organizations wring many millions of dollars of waste out of their cost of care, resulting in substantial shared savings for the organization combined with improved quality for their patients.

David Bennett, Executive Vice President of Healthier Populations, Orion Health

Bennett: The transition to accountable care by healthcare organizations has gained traction despite variable results. The biggest gain for these organizations and the populations they serve is the improvement in quality. All participating ACOs have reported improvement on quality measures submitted to the Centers for Medicare and Medicaid Services (CMS) and performed better than their fee-for-service counterparts. The operational focus on structures and processes in support of healthcare quality has produced meaningful results.   

Financial gains for the ACOs have been mixed, with only 25 percent saving enough money to share in savings. The root causes of the ACOs’ lack of financial gain have only been speculated to date. Program participants are in varying stages of ACO development, and it could be that many do not have the necessary knowledge or infrastructure to ensure financial success. Those who have had financial success attribute their gains to positioning themselves as the market leader, successfully engaging physicians and ancillary partners, as well as utilizing and enhancing care coordination services.

Greg White, Senior Vice President, General Manager, TouchWorks Business Unit, Allscripts

White: Simply put, improving clinical results has helped improve financial outcomes. One of our Allscripts TouchWorks electronic health record (EHR) clients in an ACO was able, for patients dually enrolled in Medicaid and Medicare, to reduce the average costs by 19 percent or $2,635 per patient in the first year of its ACO contract. The total amount of savings for dual eligible patients was more than $1.2 million. For the diabetic patients who gain control of their blood sugar levels, there are also financial benefits in addition to wellness benefits. Some industry studies show that lower HbA1c levels equate to an annual savings of up to $4,000 per point, per patient. As the industry as a whole moves to value-based payments and continued focus on population health, discrete clinical quality metrics place practices in better positions to receive maximum reimbursements from CMS.

HMT: How have ACOs lived up to their billing, hype and potential during the last year?

Mellin: We are still in the early phases of ACOs, and there are many aspects of the ACO model that are still undergoing experimentation and refinement. Most would argue that ACOs are not close to their inflated hype and unrealized potential, yet provider organizations continue to make substantial investments and fundamental structural changes in areas such as new leadership, new roles focused on accountable care and new investment in care management, quality and cost-of-care tools instead of brick and mortar. Forward-thinking healthcare leaders know the future of American healthcare is based on providing value to the patient, and whether or not the ACO is the exact right financial and incentive model, the foundational investments they are making now will be required to be successful in any value-based model, not simply to live up to the hype of ACOs in the short term.

Bennett: There are both positive and negative outcomes of ACO development in healthcare. The positive gains include the ability to consistently meet quality objectives for patient care. In addition, the national focus on innovative ways to deliver quality care that is patient centered at lower costs has yielded multiple new models of care delivery that can be leveraged across settings. The attention to the processes of healthcare delivery within the ACO environment has also produced a more collaborative culture where members of the healthcare team have a voice in caring for “their” patients. Unlikely partners such as insurers and providers are now working together to promote the triple aim.

The paradigm shift from volume to value created by the ACO movement has springboarded IT to the forefront of healthcare needs. The successful ACOs have invested in IT infrastructure, including the promotion of EHRs across settings and integrations to a single platform where patient information can be shared in real time. The benefits of these investments and the enhanced collaboration will take some time to realize to the fullest extent possible, but the interim results appear promising.

White: We’ve seen, first-hand, how our ACO clients have experienced great success over the past year. One Allscripts TouchWorks EHR client has been able to use reporting capabilities to provide comprehensive preventative care for patients and in one year reduced the number of emergency room visits and hospital readmissions by 10 to 15 percent. Improving clinical results has also helped this particular practice reduce unnecessary costs and remain competitive in a rapidly changing regulatory environment. Particularly, from our vantage point, we’ve seen how physicians have leveraged the collective value in capturing the clinical data. Further, we’ve seen very promising results around preventative care and screening. Better preventative care and population health management improves other clinical results. 

Sponsored Recommendations

A Comprehensive Workplace Safety Checklist

This checklist is designed for healthcare facilities focused on increasing workplace safety. It’s meant to inspire ideas, strengthen safety plans, and encourage joint commission...

Healthcare Rankings Report

Adapting in Healthcare: Key Insights and Strategies from Leading Systems As healthcare marketers navigate changes in a volatile industry, they know one thing is certain: we've...

Healthcare Reputation Industry Trends

Navigating the Tipping Point: Strategies for Reputation Management in a Volatile Healthcare Environment As healthcare marketers navigate changes in a volatile industry, they can...

Clinical Evaluation: An AI Assistant for Primary Care

The AAFP's clinical evaluation offers a detailed analysis of how an innovative AI solution can help relieve physicians' administrative burden and aid them in improving health ...