Healthcare at a Tipping Point: Are ACOs the Way Forward?

This article originally appeared in Source Magazine’s Q4 2012 Issue.

Accountable care organizations (ACOs), included in the Patient Protection and Affordable Care Act as a new model for delivering services to patients, have received a great deal of attention. The model is intended to encourage primary care doctors, specialists, hospitals and other caregivers to provide better, more coordinated care for people with Medicare while cutting costs. But as with any change to patient care delivery, joining or forming an ACO is not an easy fix.

“ACOs offer a way for disparate providers to come together and act as if they are clinically integrated,” says Albert Tomchaney, M.D., senior vice president and chief medical officer of Franciscan Alliance in Indianapolis. “In most cases, care coordination hasn’t been set up this way. Patients have had to make sure themselves that all their medical activities are coordinated. But ACOs, by design, are supposed to be about administering care across a care continuum.”

In recent years, the medical community has amassed more and more data about patient outcomes, and “it just doesn’t make any sense when we see incredible variation in care,” Tomchaney says. “That data has helped set a platform for the realization that we have a better way to move forward.” For some organizations, that better way is to form or join an ACO. Here’s what you need to know about them.

A Foundation for ACOs

The Affordable Care Act specifically mentioned ACOs and paved the way for hospitals and physicians to form accountable care organizations. Earlier this year, 32 leading health-care organizations from across the country began participating in a new Pioneer ACO initiative, which was expected to save up to $1.1 billion over five years, according to Health and Human Services Secretary Kathleen Sebelius.

But ACOs are not an entirely new idea. “Models like this have been talked about for 10 years or more,” Tomchaney says. “The Mayo Clinic, the Cleveland Clinic and others have long been clinically integrated, where nothing happens in a silo. And Elliott Fisher wrote about such a model at Dartmouth years ago.”

In addition to the models in practice at some lead- ing academic medical centers, the concept of clinical integration has even been attempted by Medicare before. Modern ACOs are linked to the Medicare’s Physician Group Practice (PGP) Demonstration, which ran from 2005–2008, says Bill Woodson, senior vice president and national thought leader for Sg2, a health-care intelligence and information services company based in Skokie, Ill. In that project, 10 large physician groups participated “in something that looked like an ACO,” Woodson continues. “In the end, they all achieved quality improvements, but they didn’t necessarily cut costs.”

However, much was learned from the PGP Demonstration that can inform the formation of ACOs, including “what tools to use and how to conduct out- reach to a population,” Woodson says.

In addition to the lessons learned from past attempts, technology has been improved and widely distributed, which makes a new attempt at coordinated care more feasible.

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