Can ACOs Make Money?

You can probably make money, but first you have to make change

If improved coordination and value-based reimbursement are going to be among the pillars of healthcare reform, then Accountable Care Organizations will be one of the most reliable means of getting there. Once we arrive we’re going to find a landscape filled with cost and quality benchmarks, closely measured accountability, risk stratification, population health management, re-aligned incentives and alternative compensation models.

In the midst of these challenges and new approaches the one question all of us are asking is, “Can ACOs make money?”  The simple answer seems to be … “It depends.”

What we’ve learned from studying stepping stone initiatives like the CMS Pioneer Program and the Medicare Shared Savings Program, as well as other ACO and bundled payment models is that some uncertainty still remains regarding the economics. More financial data will be forthcoming and it will undoubtedly bring more definitive results, but given the upfront investments needed in technology, staffing and other infrastructure, initial success isn’t a slam dunk, even for ACO participants who have had some previous experience with capitation.

Although success may not be guaranteed it is taking place in a growing number of instances and a look at the first generation of ACOs offers a good idea of what needs to be in place. These factors include a particularly strong focus on HIT capabilities, the ability to keep outmigration from the organization to a minimum and a clear picture of expenditures.  What may not be communicated in an evaluation of current ACOs, however, is the softer criterion of personal transformation.

On the most basic level, moving toward an ACO model of care delivery and reimbursement involves change, and as human beings in general and healthcare people in particular, change doesn’t always come easy. That’s why along with our questions related to the economic viability of ACOs we should be asking ourselves if we’re ready to transform clinical and administrative behaviors on the scale needed to make value-based medicine effective.

At the very least, that kind of transformation will involve changes in workflow and staffing, a different approach to – and different criteria for – decision making, a significant increase in reporting requirements and a shift to managing care along the total health continuum.  In addition, it will involve at least some movement away from traditional practice methods and a concentrated emphasis on patient-centered care including tactical features like more open access scheduling, more online tools for patients and extended hours.

At best, the transformation that necessary to make ACOs pay off will, ultimately, center on what I have always believed to be the most important single feature of primary care medicine: the relationship and associated interaction between patients and physicians. The personal motivation and the clinical imperative for care providers to understand more about the environment and overall context in which their patient lives, works and recreates – and the corresponding trust on the part of the patient to share this information – is essential for effective treatment, especially when it comes to managing chronic disease.  Similarly, that same relationship is critical for preventive care information to be valued by the patient and family, whether it’s conveyed directly by the physician or through another team member.

It’s very likely that the conversation around ACOs will remain centered on analytics, economics and the ability to embrace financial risk.  As your organization confronts those issues, just don’t lose sight of the fact that it’s equally important to embrace the kind of cultural changes that will strengthen the patient-physician bond and improve our ability to implement true patient-centered care. Because no matter where you end up in the area of accountability, that’s where you begin.