Pitfalls in ACO design

Henry Chung, MD, chief medical officer of Montefiore Medical Center’s Care Management Organization in the Bronx, N.Y., says one of the first things a hospital has to decide when forming an ACO is what entity is going to take on the financial risks.

Care coordination networks are a mainstay of the Affordable Care Act’s cost reduction goals. Accountable care organizations, or ACOs, are the most widely recognized of these networks, yet by no means is design of these business arrangements simple or straightforward.

In a basic sense, an ACO joins physicians and hospitals to collectively share financial and medical responsibility for a defined group of patients over a certain period of time. But the universe of possible structures is quite large.

“One of the first things a hospital has to decide is what entity is going to take on the financial risks,” said Henry Chung, MD, chief medical officer of Montefiore Medical Center’s Care Management Organization in the Bronx, N.Y. “Sometimes the hospital may want to take the risk themselves. In other scenarios, hospital and community doctors come together to form a new company.”

[See also: ACOs get down to brass tacks.]

In the world of ACOs, another important piece of the puzzle is organizing a group of participating physicians. There needs to be a robust, outpatient primary care-oriented system. Savings are largely going to come from keeping people out of the hospital and by reducing unneeded testing and procedures.

“These are local situations structured according to what is doable and available in the specific community,” said Chung. “If the hospital has a deep enough primary care bench, they may be able to do it all themselves. On the other hand, if their outpatient part isn’t as robust they may bring independent physicians into the organization.”

Importance of data

Creating and implementing data sharing is another concern associated with ACO financial and medical risks. 

“You need real-time clinical data to support patients through care transitions. You need longitudinal data to stratify your population in risk categories,” said Amy Harris-Overby, director of population health infrastructure at Fairview Health Services in Minneapolis, Minn. “These are important but expensive capabilities that may not currently exist across ACO partners and will need to be developed.”

In addition, the system must be able to look back to see how well patients have done in the past to highlight what has worked – and not worked. These are two big and expensive pieces that have to be prearranged between the hospital and physician partners.

The costs of healthcare have as much to do with social determinants as the medical care provided.

The earliest ACO adopters soon learned that much of the savings came from outside the traditional areas of healthcare. Many unneeded and/or multiple admissions were the result of non-medical social factors such as transportation, finance and housing.

“At very high levels there has to be recognition that the costs of healthcare have as much to do with social determinants as the medical care provided,” said Anne Meara, RN, associate vice president of network management at Montefiore. “An important element to be recognized is that skill sets for resolving these issues are not necessarily those seen in a doctor’s office or hospital.”