By the end of 2014, according to a Premier Inc. survey of hospital executives, about half of the nation's hospitals will be participating in an accountable care organization (ACO). That represents a jump from 18 percent in the fall of 2013 and less than 5 percent in the spring of 2012.
Such dramatic growth suggests that the ACO model, with its emphasis on coordinated care and shared financial risk, will play a vital role in paving the path to healthcare reform. When physicians, specialists and hospitalists work together - and aren't beholden to the fee-for-service model - it's expected that overall costs go down while the quality of care improves.
The ACO model itself, authorized by the Affordable Care Act, suffered a bit in 2013. Of the 32 participants in the Pioneer ACO Model, nine dropped out last July. What's more, of the original 32, only 13 Pioneer ACOs saved enough to share savings with Medicare.
Look beyond the headlines, though, and the concept of accountable care fared better. First, the Premier study estimates that there are as many as 500 ACOs in the United States. In addition, seven of the nine Pioneer "dropouts" switched to the Medicare Shared Savings Program; though the MSSP carries less risk (and therefore less reward, it also emphasizes more coordinated care. Finally, and perhaps most importantly, Health Affairs points out that it's more helpful, after but one year, to deem the Pioneer ACO Model a learning opportunity and not a flawed program.
Analytics May Help ACOs Succeed Where Capitation Failed
Jonathan Gluck, senior executive and corporate counsel with the Heritage Provider Network, says the ACO model, when you get down to it, is pretty simple. An organization has a pool of patients. Government benchmarks determine the amount of money the organization receives from public and private payers to care for those patients. Any money the organization saves gets shared among its members.
"It's a much more effective model to provide higher quality care to more people for less money" than the incumbent fee-for-service model, Gluck says.
But it's hard to discuss the ACO model of today without bringing up the health maintenance organization (HMO) model of yesterday. The HMO relied on capitation, which sets a fixed amount of revenue for a healthcare provider. Success under capitation means managing risk and practicing preventive healthcare, as preventing illness costs less than treating it.
Capitation took aim at the fee-for-service model of healthcare reimbursement that, in the mid-1990s, was only beginning to spiral out of control. It failed, though, in large part because physicians lacked the data to measure their own performance, IDC Health Insights wrote in last year's report, Business Strategy: Analytics Leads Accountable Care Investment Priority.
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