ACOs: The New Rx for Health Care Delivery?

Many of the estimated 27 million people in ACOs aren't aware they are in one, but do notice that their doctors and other care providers seem more attentive to their needs. That's because ACOs, entities triggered by the controversial 2010 Affordable Care Act (also known as Obamacare), force hospitals, doctors and other health care professionals to rethink how they deliver care so it is more coordinated, better quality and lower cost.

The federal government will implement health insurance exchanges in the 25 states that are not moving forward, helping the uninsured gain coverage.

Health care providers are working together to deliver better, less expensive care.

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But some question how far Medicare ACOs can really change patient care. "It's really tough to practice managed care without the patient's knowledge or consent, or sharing some of savings with them—the fundamental flaw in ACO program design," according to Jeff Goldsmith, president of Health Futures Inc., a health care forecasting firm, in a Aug. 15 Health Affairs blog post. Nine of the 32 Pioneers will not continue in year two—although seven are applying as lower-risk ACOs to Medicare Shared Savings Program.Still, best of all, ACO patients get all this extra attention and upfront care at no extra cost or hassle. Medicare beneficiaries see no changes to their benefits and are free to seek care from any hospital or doctor, unlike Medicare Advantage health plans that limit enrollee choice.

The onus is on the ACOs to make the care experience one that keeps patients coming back to its doctors. "This is a free-choice market and their choices are made on their perception of value," says Drew. ACOs are boosted in their population health efforts as Medicare provides three years of medical data on each ACO beneficiary.

Even with the data advantage, ACOs represent "a tumultuous experiment in health care payment and delivery" for hospitals and doctors, says Croshaw. ACOs are "trying to change decades of [fee-for-service] culture, incentives and care profits," he says, to focus instead on wellness.

That's tough in a system still dominated by fee-for-service payment and where hospitals thinking still is ruled by heads-in-a-bed mentality. As hospital- and doctor-led ACOs vie for patients, they also need each other. Hospitals have the deep pockets needed for ACO investments, including electronic health record systems and other technology purchases, and a visible brand in communities. Physicians don't have those assets but are critical in terms of influencing cost and utilization decisions, and are more closely connected to patients.

"This is the hospital of tomorrow," notes Dr. Timothy Ferris, vice president for population health management at Partners HealthCare. "It will be increasingly extending the scope of its operations outside of its walls. I don't see a bright future for hospitals not part of [the ACO] movement. It is absolutely essential."



Corrected, 09/03/13: An earlier version of this article stated that Heritage California ACO sponsors social trips to Las Vegas. The ACO arranges trips to casinos in California, not Las Vegas.

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