If you haven’t already heard of Accountable Care Organizations (ACOs) , you will soon. Designed to coordinate care among doctors, hospitals, and other healthcare providers, these organizations may well be the HMOs of the new millennium. Born out of a desire to reduce inefficiencies in the healthcare system, ACOs promise to improve care coordination, reduce medical errors, and lower overall health care costs, all without the restrictions commonly encountered with HMOs.
Originally conceived by Elliot Fisher , the Director of the Center for Health Policy Research at Dartmouth Medical School in 2006, the idea rapidly spread through policy circles until it was integrated into the Patient Protection and Affordable Care Act (PPACA) in January of 2012. Essentially, the idea behind ACOs is care coordination. As policymakers looked at the health care system, they saw patients receiving care from multiple doctors with each doctor focusing on his or her own area of expertise. Doctors frequently pursued their own objectives, often independently. Frequently, tests were unnecessarily duplicated, treatment plans lacked follow-up, and no one was accountable for the overall health of the patient. To make matters worse, doctors were financially incentivized by public and private insurers to overtreat patients. Doctors received payments for each procedure they completed rather than for improvement in a patient’s condition.
Accountable Care Organizations are designed to address the shortcomings of the traditional health system by utilizing the pooled resources of doctors, clinics, and hospitals. Patients are given a “medical home,” normally a primary care practice, where prevention, testing, treatment, and follow-up are managed. While patients can enter the system at any location within the ACO, information is shared between all ACO providers. The patient’s primary care physician acts as the patient’s guide throughout the process. Rather than receive payment for each episode of care, ACO physicians and providers share in a lump sum.
While ACOs initially focused on Medicare patients, the concept has spread to the private sector. Preliminary results point to some success in reducing hospital admissions . In the area of cost, however, critics warn that ACOs do little to change doctor behavior which has traditionally focused on treating patients rather than managing costs. Even if doctors are able to make this adjustment, they may face a backlash from patients. If doctors are perceived to be more interested in financial gain than patient health, patients may rebel as they did with HMOs. Other impediments ACOs face include high start-up costs for technology, the development of a payment model that satisfies all participants, and the fear that ACOs will ultimately create a monopoly where doctors and hospitals can raise prices with impunity.
Despite the unknowns, ACOs are rapidly becoming an important force in health care. Over 330 ACOs are already in operation, up from 164 in 2011. Currently, 31 million people receive their care from ACOs with applications for an additional 500 ACOs being considered in 2013. With billions of dollars at stake, it’s clear that ACOs are here to stay.