The Future of ACOs: Will They Fail or Succeed?
Senior Living Executive spoke with Fred Bentley, a vice president with healthcare consultancy Avalere to get his insight on the current landscape of Accountable Care Organizations and their long-term viability.
What would make ACOs fail? Provider organizations are likely to drop out of the ACO shared savings model if they can’t generate sufficient savings to offset their investments in additional care coordinators, new information technologies and other population health capabilities. This will only become more challenging as ACOs take on more significant financial risk and face significant penalties for underperformance on cost and quality.
What will it take to make ACOs succeed? Success will require several things, starting with more timely and actionable data to guide clinical interventions. Currently, there’s a significant time lag for the data that ACOs receive, and they often miss opportunities to intervene early to avoid high-cost care episodes. Patients will also have to have more skin in the game for ACOs to succeed. Under the current model, ACOs are restricted from limiting patients’ access to doctors and hospitals or providing incentives to stay within a defined provider network. While safeguards need to be in place to ensure adequate access, ACOs will need additional latitude to influence patient choice to achieve meaningful gains.
Do ACOs help patients? Why or why not? ACOs provide their patients with expanded access to prevention and wellness services along with more intensive care management – these are the key benefits of the ACO model from the patient’s perspective.
Do ACOs solve any problems? Although the ACO-shared savings model is still based on a fee-for-service arrangement, ACOs are held accountable for the total cost of care for their attributed patient population. As a result, we’re seeing ACOs making significant strides in shifting from “sick care” to a clinical model that emphasizes prevention and care management. The results are not overwhelming, but there’s mounting evidence that ACOs can drive down emergency room visits, hospitalizations and readmissions while improving the care quality and clinical outcomes.
What will be the status of ACOs in 10 years? Many of the ACOs in existence today will either fizzle out or evolve into more advanced risk-bearing provider organizations. The ACO model is not a particularly sustainable economic model given that it’s based on sharing savings with a payer. ACOs that can generate meaningful savings will want to keep more of those savings, which will compel them to move into capitated payment arrangements or even launch their own health plan to capture the full premium dollar. (Capitated payment systems are based on payment per person rather than a payment per service provided.) Ultimately, the ACO model will serve as a bridge to more advanced risk-based arrangements for some physician groups and health systems.
Bentley advises clients on health delivery and payment innovation. Over the past five years, his work has focused on supporting health systems engaged in Medicare and Medicaid payment and delivery system transformation initiatives. Prior to joining Avalere, Bentley was a principal in the Accountable Care Solutions practice at The Chartis Group where he worked with hospitals and health systems in developing roadmaps to guide their clinical innovation, population health and cross-continuum integration initiatives. Bentley also served as a managing director with The Advisory Board Company, managing a team of consultants and analysts who supported leading health systems and post-acute care providers.
JULY/AUGUST 2016 / SENIOR LIVING EXECUTIVE 13
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