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Health IT Pulse

Mar 30 2011   11:35AM GMT

ACOs on fire — at least as a concept — but what’s the bottom line?

Posted by: DonFluckinger
accountable care organizations, ACO, clinical data analytics, Health care reform and federal initiatives, HMO

Accountable care organizations (ACOs) promise to lower health care costs while raising the quality of care and saving the U.S. health care system from bankruptcy, all in one fell swoop. Pardon our jaded perspective, but that sounds pretty optimistic for a concept that smells like a health maintenance organization. HMOs still exist, but they mostly have faded from view since their late-1980s and early-1990s heyday.

Yet the U.S. Department of Health & Human Services will publish its Medicare rule for contracting with ACOs any day now, amid calls for rolling out the organizations nationwide. Private insurer Cigna claims in new research, for example, that its ACO saved an average of $336 per patient per year.

But what really is the bottom line on ACOs, which could call for significant IT investment in clinical data analytics tools and other software to enable the reporting of patient data to insurers? A recent New England Journal of Medicine report counted the financial risks academic medical centers must assume in pursuing ACO status.

Not surprisingly, those risks centered on the IT systems that will have to be built or augmented from existing platforms — and academic medical centers typically have more robust networks than the average hospital. That means the typical nonacademic hospital will have to assume even more risk in to attain ACO status.

How big a risk is it? Ask your chief financial officer. Insurers like Cigna might like to pocket the savings ACOs afford, but they don’t have to assume the risks, as hospitals will. And with state and national efforts afoot to repeal or replace health care reform and its ACO mandates a year after it passed, how many hospital CFOs — who probably are having a hard time already making ends meet in these cash-strapped times — will happily invest in new network infrastructure to support the concept of accountable care? None.

Yet ACOs remain hot, and they’ll get even trendier once HHS publishes its guidelines for Medicare. It will take some time before we know whether the idea is pure hype or will realize the potential its advocates promise. One thing’s for sure: If they fail, the hospitals who invested in network tools to support their ACO status will be stuck with the tab for an unfunded mandate.

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Paulroemer  |   Mar 31, 2011  10:28 AM (GMT)

I love the concept of an ACO, but I also love the concept living on Mars. Until such time as a single provider knows what a single procedure costs, how can they allocate costs? Without knowing costs, how in turn can they talk about savings? Certainly, they can like the idea of savings, but can anyone tell you what a hip replacement costs, or what will be saved under an ACO model?

To start messing around with healthcare IT systems without knowing how the business must operate will add enough additional risks to crater the current business model.


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