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Aug 30 2011   11:33AM GMT

ACOs: Good idea, long way to go

Posted by: Jenny Laurello
Accountable Care Organizations, ACOs, Capitation, Meaningful use

Guest post by:  Paul Brient, CEO, PatientKeeper Inc.

Accountable Care Organizations (ACOs) are part of almost every conversation I have with customers and prospects. The ACO concept is not a new one; it looks fairly similar to delegated capitation arrangements that many payers implemented 10 or 15 years ago.  While controversial, capitation was fairly effective at controlling costs.  The population in general, however, responded negatively to it in many places. Harvard Pilgrim Health Care, which got started in a capitation clinic model, had some of the best quality ratings back when they utilized that model, but also some of the worst customer satisfaction ratings.

Interestingly, in California, capitation still is the norm, and it has been an effective technique for managing costs and ensuring quality. Many in California are quite happy with it. In fact, a PatientKeeper client in California has been one of the ACO pilot sites. They’re a full delegated risk capitation health group, both from the hospital side and on the primary care side.  They service about 500,000 patients, do a great job and they’re regarded as a premier place to receive health care. One of the things they’ve accomplished, in part with our technology, is to dramatically reduce hospital readmission rates by improving communication between the hospital and a patient’s PCP upon discharge. The net effect is better care, higher patient satisfaction and a huge cost savings.

So conceptually, I believe ACOs are a good idea. The legislation and regulations to put ACOs into practice, however, are difficult at best for providers, patients and the community at large to understand. To date, the ACO proposal has sparked more confusion than clarity.

For example, if you look at the specifics of the legislation and some of the requirements of ACOs, and then compare that to the size of the panels that they are requiring, there is a major overhead problem. The minimum panel size permitted is 5,000 people.  With the governance and infrastructure requirements to properly manage a population, however, it just can’t be done anywhere near a scale of 5,000 people. You need a population of hundreds of thousands or more to support the management overhead that has been defined.  So it will be interesting to see how this plays out in the real world.

The current document is just a draft.  If the meaningful use guidelines are any indication of how this might play out, when comments come back I suspect one of two things will happen:

  • One is they might raise the panel size. I think that’s impractical, unfortunately, given the way health care is organized in this country — primarily into local, relatively small health care “communities.”
  • The other, which is what I think will end up happening, is they may water down the requirements, perhaps to the point where what’s left is fairly ineffective.

Only time (and perhaps a lot of it) will tell.

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