What Is An ACO?

One third of the healthcare dollar, in the United States, is spent on the last 6 months of a person’s life and that’s because our system revolves around sickness, rather than wellness. Due to the Affordable Care Act (ACA), the end result is that sickness will no longer bring in more money!

Who can argue that shifting our healthcare system from incentivizing sickness to wellness is wrong?

We’ve been spending some time explaining how Triple Aim is going to be accomplished under the ACA. Let’s refresh…

The three goals of Triple Aim are:

  1. Improve quality of care

  2. Improve health for populations

  3. Reduce costs

Created by the ACA, an Accountable Care Organization (ACO) is a collection of healthcare providers linked together legally, financially, and clinically, who take a shared responsibility for delivering care to a 5,000 person patient population.

ACOs are paid directly from the government through the new payment system called “bundled payment.” Pretty soon we will see that if a patient becomes sick and uses more services than expected, they will more than likely come close to their “cap”, or amount allotted for that disease entity, or exceed it.

There are no limitations to the kinds of providers who can participate in ACOs – hospitals, emergency rooms, home health, hospice, nursing homes, urgent care centers, primary care, specialists, etc.; basically anyone who has a healthcare service can be in this provider organization. It will be up to each individual ACO administration as to who can be a part of their organization.

There is absolutely no patient reform in the ACA. A patient can go to any provider they choose, anytime the want and as frequently as they see fit. This is acceptable to patients, but has created a real vulnerability for the ACOs.

When a patient is signed up under an ACO, they are not obligated to seek services from only the providers within their particular organization. This is the Achilles heel of ACOs; providers are no longer only responsible for their patients that walk through their office doors, but also those that don’t. This is a huge change in healthcare provider’s thinking.

Just yesterday, nine Pioneer ACOs admitted to failure because of their inability to control a patient’s activity outside the ACO network.

By definition, ACOs are entirely responsible for the health of their assigned population of patients. To not manage the health of their population efficiently makes the ACA vulnerable and the efforts of the Triple Aim null.

It will be a combination of building the structure for these providers to work together, under an ACO, as well as aligning finances with quality, under the bundled payment system that we will experience a restructuring of our healthcare system.

We will continue our conversation about ACOs tomorrow.