The Future of ACOs Remains Cloudy

Experts disagree on what a sustainable accountable-care organization (ACO) will look like in the future. The shared savings model currently dominates the ACO landscape, but David Muhlestein, an analyst with Washington, D.C.-based healthcare consulting firm Leavitt Partners, says his firm’s interviews with participants suggest that very few see the approach as the best long-term answer. Some believe those capitated models of the 1990s—the much-despised HMOs with their narrowly defined networks and global payments to provider groups—could make a comeback in a slightly altered form. Others feel strongly that a bundled payment model, which provides more flexibility in where patients can go for care, will instead dominate. A few providers have even suggested that the shared savings experiment will eventually revert back to a fee-for-service approach.

“Right now, the ACOs that have formed are people who want to forge their own trail. There are many more providers that want to follow some path, and they want to follow a path that has some evidence that it has been successful.”

—David Muhlestein, analyst, Leavitt Partners, Washington, D.C.

SHM Public Policy Committee chair Ron Greeno, MD, FCCP, MHM, says bundled payments and shared savings alone are unlikely to deliver optimal value within the integrated care structure.

“There’s just not enough incentive, and the organization that’s taking risk doesn’t have enough flexibility in terms of how they use resources,” says Dr. Greeno, chief medical officer of Cogent HMG. The real improvements, Dr. Greeno says, might not come until ACOs assume a more capitated structure in which they accept global risk and are given unfettered freedom in how they allocate payments. In the meantime, he says, Medicare could be simply trying to encourage organizations “to start dipping their toe in the water of integrated care.”

John Pilotte, director of performance-based payment policy in the Center for Medicare at CMS, agreed that one major aim of its Shared Savings Program is to provide a “new avenue for providers to work together to better coordinate care for Medicare fee-for-service beneficiaries, and to move away from volume-based incentives and to recognize and reward them for improving the quality and efficiency and effectiveness of the care they deliver.”

Muhlestein says his firm has spoken with many organizations that are carefully monitoring how the current ACOs are faring. “Right now, the ACOs that have formed are people who want to forge their own trail,” he says. “There are many more providers that want to follow some path, and they want to follow a path that has some evidence that it has been successful.”

The more paths that are taken, he says, the greater the likelihood that one or more will achieve success. And although healthcare analysts often talk about success in terms of controlling costs, Muhlestein says, quality improvement (QI) and better outcomes alone could prove alluring to would-be ACOs.

“Even if we don’t see a moderation in cost growth, but we do see an improvement in quality, there is the chance that the model could still stick around, because that’s enough,” he says. “Even if we’re paying the same amount, we’re getting better results, so our value has improved.”

Regardless of how the ACO experiment plays out, Dr. Greeno says, it represents a fundamental shift toward a more integrated, pay-for-performance healthcare system that will not be optional for providers in the near future.

“Everyone is going to be asked to perform at a higher level, and there’s going to be tremendous pressure on hospitalists to lead that performance,” he says. “My advice would be to embrace it—it’s a great opportunity to bring value to the healthcare system.” TH

 Bryn Nelson is a freelance medical writer in Seattle.

Experts disagree on what a sustainable accountable-care organization (ACO) will look like in the future. The shared savings model currently dominates the ACO landscape, but David Muhlestein, an analyst with Washington, D.C.-based healthcare consulting firm Leavitt Partners, says his firm’s interviews with participants suggest that very few see the approach as the best long-term answer. Some believe those capitated models of the 1990s—the much-despised HMOs with their narrowly defined networks and global payments to provider groups—could make a comeback in a slightly altered form. Others feel strongly that a bundled payment model, which provides more flexibility in where patients can go for care, will instead dominate. A few providers have even suggested that the shared savings experiment will eventually revert back to a fee-for-service approach.

“Right now, the ACOs that have formed are people who want to forge their own trail. There are many more providers that want to follow some path, and they want to follow a path that has some evidence that it has been successful.”

—David Muhlestein, analyst, Leavitt Partners, Washington, D.C.

SHM Public Policy Committee chair Ron Greeno, MD, FCCP, MHM, says bundled payments and shared savings alone are unlikely to deliver optimal value within the integrated care structure.

“There’s just not enough incentive, and the organization that’s taking risk doesn’t have enough flexibility in terms of how they use resources,” says Dr. Greeno, chief medical officer of Cogent HMG. The real improvements, Dr. Greeno says, might not come until ACOs assume a more capitated structure in which they accept global risk and are given unfettered freedom in how they allocate payments. In the meantime, he says, Medicare could be simply trying to encourage organizations “to start dipping their toe in the water of integrated care.”

John Pilotte, director of performance-based payment policy in the Center for Medicare at CMS, agreed that one major aim of its Shared Savings Program is to provide a “new avenue for providers to work together to better coordinate care for Medicare fee-for-service beneficiaries, and to move away from volume-based incentives and to recognize and reward them for improving the quality and efficiency and effectiveness of the care they deliver.”

Muhlestein says his firm has spoken with many organizations that are carefully monitoring how the current ACOs are faring. “Right now, the ACOs that have formed are people who want to forge their own trail,” he says. “There are many more providers that want to follow some path, and they want to follow a path that has some evidence that it has been successful.”

The more paths that are taken, he says, the greater the likelihood that one or more will achieve success. And although healthcare analysts often talk about success in terms of controlling costs, Muhlestein says, quality improvement (QI) and better outcomes alone could prove alluring to would-be ACOs.

“Even if we don’t see a moderation in cost growth, but we do see an improvement in quality, there is the chance that the model could still stick around, because that’s enough,” he says. “Even if we’re paying the same amount, we’re getting better results, so our value has improved.”

Regardless of how the ACO experiment plays out, Dr. Greeno says, it represents a fundamental shift toward a more integrated, pay-for-performance healthcare system that will not be optional for providers in the near future.

“Everyone is going to be asked to perform at a higher level, and there’s going to be tremendous pressure on hospitalists to lead that performance,” he says. “My advice would be to embrace it—it’s a great opportunity to bring value to the healthcare system.” TH

 Bryn Nelson is a freelance medical writer in Seattle.

Experts disagree on what a sustainable accountable-care organization (ACO) will look like in the future. The shared savings model currently dominates the ACO landscape, but David Muhlestein, an analyst with Washington, D.C.-based healthcare consulting firm Leavitt Partners, says his firm’s interviews with participants suggest that very few see the approach as the best long-term answer. Some believe those capitated models of the 1990s—the much-despised HMOs with their narrowly defined networks and global payments to provider groups—could make a comeback in a slightly altered form. Others feel strongly that a bundled payment model, which provides more flexibility in where patients can go for care, will instead dominate. A few providers have even suggested that the shared savings experiment will eventually revert back to a fee-for-service approach.

“Right now, the ACOs that have formed are people who want to forge their own trail. There are many more providers that want to follow some path, and they want to follow a path that has some evidence that it has been successful.”

—David Muhlestein, analyst, Leavitt Partners, Washington, D.C.

SHM Public Policy Committee chair Ron Greeno, MD, FCCP, MHM, says bundled payments and shared savings alone are unlikely to deliver optimal value within the integrated care structure.

“There’s just not enough incentive, and the organization that’s taking risk doesn’t have enough flexibility in terms of how they use resources,” says Dr. Greeno, chief medical officer of Cogent HMG. The real improvements, Dr. Greeno says, might not come until ACOs assume a more capitated structure in which they accept global risk and are given unfettered freedom in how they allocate payments. In the meantime, he says, Medicare could be simply trying to encourage organizations “to start dipping their toe in the water of integrated care.”

John Pilotte, director of performance-based payment policy in the Center for Medicare at CMS, agreed that one major aim of its Shared Savings Program is to provide a “new avenue for providers to work together to better coordinate care for Medicare fee-for-service beneficiaries, and to move away from volume-based incentives and to recognize and reward them for improving the quality and efficiency and effectiveness of the care they deliver.”

Muhlestein says his firm has spoken with many organizations that are carefully monitoring how the current ACOs are faring. “Right now, the ACOs that have formed are people who want to forge their own trail,” he says. “There are many more providers that want to follow some path, and they want to follow a path that has some evidence that it has been successful.”

The more paths that are taken, he says, the greater the likelihood that one or more will achieve success. And although healthcare analysts often talk about success in terms of controlling costs, Muhlestein says, quality improvement (QI) and better outcomes alone could prove alluring to would-be ACOs.

“Even if we don’t see a moderation in cost growth, but we do see an improvement in quality, there is the chance that the model could still stick around, because that’s enough,” he says. “Even if we’re paying the same amount, we’re getting better results, so our value has improved.”

Regardless of how the ACO experiment plays out, Dr. Greeno says, it represents a fundamental shift toward a more integrated, pay-for-performance healthcare system that will not be optional for providers in the near future.

“Everyone is going to be asked to perform at a higher level, and there’s going to be tremendous pressure on hospitalists to lead that performance,” he says. “My advice would be to embrace it—it’s a great opportunity to bring value to the healthcare system.” TH

 Bryn Nelson is a freelance medical writer in Seattle.