- CATEGORIES: Accountable Care Organizations (ACOs),Doctors and Hospitals,Improve Your Practice
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by Charu G. Raheja, PhD, TriageLogic Chair
According to a recent analysis from the consulting firm Oliver and Wyman, about 10% off Americans are now part of Accountable Care Organizations (ACOs). Your healthcare provider may be part of an ACO. Originally designed to contract with Medicare to help reduce health care costs, ACOs are now starting to contract with private insurers such as Aetna and Humana to care for private patients as well. ACOs are now becoming an important player in delivering care to patients.
What are ACOs?
ACOs are health care plans that link medical providers together to improve quality and decrease unnecessary health care expenses. Their goal is to push high quality and less expensive treatments. The health care plans pay providers to manage the care of the patients enrolled in a program, and the providers receive a reward if the patients stay out of expensive care and expensive hospitals. They were originally designed to help Medicare and Medicaid services under the Affordable Care Act, but recent studies are indicating that they are starting to be implemented in the private sector. That is, insurance companies are starting to offer similar incentives for providers to care for their private patients.
ACOs take responsibility for reducing costs, keeping patients out of emergency rooms and hospitals whenever possible, and help patients manage their own care through compliance with medications and needed appointments. Unlike an HMO, patients don’t have to stay within a single provider network, because ACOs are collaborations established by independent providers working together. As long as the quality and cost outcomes and goals of the ACO are met, participating doctors and hospitals can remain within their own structure and framework, and so can their patients.
How prevalent are ACOs?
According to consulting firm Oliver Wyman, ACOs now reach between 25 and 30 million patients, far beyond the 2.4 million reached initially through the government’s voluntary Medicare ACO program. In addition, over 500 organizations have applied for the Medicare Shared Savings Program to begin this month. This means healthcare organizations are banding together to share best practices in terms of quality healthcare and cost controls, and they will also share in the savings generated from these efforts.
How will ACOs impact patients?
A key feature of ACOs is that they want to keep patients healthier. ACOs are being rewarded for the cost savings, but implied in the reward is that they can only save costs if patients are healthier. Sick patients require more specialist care, more hospitalizations, and more medicine. So keeping patients healthier is an important incentive for them.
Will this work? Skeptics are worried that some ACOs will not send sick patients to specialists or for expensive, but crucial testing in order to save costs. While this can save expenses in the short run, the long run impact of avoiding necessary healthcare is even more expense trying to correct issues that could have been resolved quickly and effectively.
Whether providers are going to focus on short run or long run, big picture care will depend on how they are being compensated. It is extremely crucial that providers are decompensated for the long-run view as opposed to short-term cost savings. In a sense, just like in publicly traded organizations, physicians now need to be compensated like chief executive officers with the goal of providing long-term value. Just like in the case of compensating CEOs the compensation of providers needs to have some short-term incentive, but a lot of long-term incentives. Providers need to know that they are in it with their patients for the long run.