The healthcare reform discussions, of a few years back, and resulting policy creation, advocate the formation of accountable care organizations (ACOs). The ideas behind this concept and projected outcomes seem positive and beneficial to all parties involved: physicians, hospitals, patients, and the third-party payer. The new health law is slated to launch in January 2012 and only seven of its thousands of pages speak to the concept of accountable care organizations. Will ACOs lead us down the road to healthcare paradise or perdition? Or something in between?
Definition
Accountable care organizations represent a healthcare reform model, which seeks to associate physician compensation and reimbursement with quality of care. The ultimate goal for proponents of this model is a reduction in total cost of healthcare for certain patient groups without sacrificing quality. Physician groups, individual physicians, hospitals and other qualified healthcare professionals can agree to form an ACO and provide care to their target population of patients. The resulting organization is then accountable to a third-party payer (Medicare) and patients based on quality metrics and cost savings.
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How Is It Different?
ACOs will provide an all-in-one healthcare solution for patients. The network will include primary care physicians, specialists, hospital facilities, home care, and therapies, ensuring that communication between the providers and quality of care remain highly efficient and cost effective. Patients will still have the freedom to choose specialists and other providers outside of the ACO network, but physicians will most likely refer patients to those within the network as a first choice.
Benefits
ACOs present a unique opportunity for cooperative physicians and third-party payers, with Medicare representing the biggest by a large margin, to save on healthcare spending. The network of providers and healthcare facilities in an ACO must provide and manage the care of at least 5,000 Medicare patients for a minimum of 3 years. The savings generated by more efficient care with less waste leaves monies available to reward the providers for high quality care. Theoretically, physicians will strive to provide the highest quality, most efficient care possible since they receive bonuses based on quality metrics. If the standards of care are not met, the physicians do not receive a share in overall savings and stand the possibility of losing their contracts.
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Risks
As hospital conglomerates buy physician partnerships and practices in an effort to integrate into the ACO model, this leaves fewer private hospitals and healthcare providers in the market. The resulting massive healthcare systems, with their greater market share, will have more negotiating power with insurers, which may send health care costs soaring higher than ever. Furthermore, as ACOs gain in popularity and size, they could run into legal issues associated with anti-trust and anti-fraud statutes. Some behemoth-sized organizations may have most providers in a region within their networks, limiting competition and causing higher prices.
Considerations
Whether it’s ACOs, boutique medical groups, or a future healthcare service concept, Americans and lawmakers must consider all aspects and possibilities associated with its implementation. Like many industries in the U.S., those in healthcare tend to follow the latest and greatest medical trends without thinking through the business side of things. Proven, cutting edge medical technology only works to its fullest potential in a functional healthcare business environment. Any healthcare model that promotes massive conglomerate systems, coupled with close governmental oversight, should send up red flags for those who believe physicians should have the ultimate freedom to decide what is best based on their medical training and experience, not a government metric.
