Hospitals and ACOs

Whether they really will be a radical improvement in health care delivery or not, accountable care organizations are on the way.  A new Issue Brief from the Commonwealth Fund examines whether hospitals, who are most often the sponsors of an ACO, are ready to implement and operate these new delivery vehicles effectively.  (Commonwealth Brief)   The authors drew on a survey of 1672 hospitals in 2011.  Somewhat surprisingly, only 13% of hospitals said they were participating in an ACO, while 75% said they had no plans to participate now or in the future.  But since most hospitals are in smaller cities and towns, they may feel no pressure or need to participate.  Of those who are in or plan to be in an ACO, about 50% were governed by a joint hospital-physician group, about 18% were led by the hospital, 20% by physicians and only 2% by payers.  Over 50% were planning to use a shared-savings model with no risk for financial loss, while about 27% were going to take global payments, which do entail financial risk.

At the same time, only about half the hospitals said they thought they had the financial strength to accept risk and while 85% said they have information systems to track utilization and 73% said they could share clinical information across care settings, many are unsure about their ability to effectively manage care if they are at risk financially.  Most of the hospitals and their associated ACOs are planning to seek commercial contracts, including with self-funded employers; about 32% are going to participate in Medicare’s ACO pilot but only 16% said they were seeking Medicaid ACO business.  There may be a disjunct between hospitals willingness to take real financial risk and commercial payers expectations in that regard.  Hospitals also seem to have few tools to do true population management, including identification of likely high-cost patients.  For hospitals in an ACO the top three reported challenges were reducing clinical care variation, reducing the cost of care and creating a common culture across partners.  There is a long way to go before ACOs demonstrate that they work and deliver good care outcomes and can rein in spending.