Thursday, May 31, 2012

A less rosy view of ACOs and global payments

This post at Disease Management Care Blog brings back memories of concerns raised by Dr. Robert Galvin at a recent MA Health Data Consortium seminar, about the complexity of implementing new payment regimes and also about the unintended consequences of market domination by accountable care organizations (ACOs).  The author,  Jaan Sidorov, summarizes a recent article by Richard Stefanacci, as follows:

Hospitals and physicians will continue to pursue merged arrangements characterized by a) shared risk, b) less physician autonomy and c) greater efficiency. Yet, it's still too easy for these first generation ACOs to underestimate the downsides of risk contracting and it's even easier for them to under-invest in care management programs. Add to this the a) "dismal" track record of past physician-hospital collaborations, b) disappointing Physician Group Practice Demo results and c) disconnect between inferred savings and hard dollars, and there is every reason to be skeptical about the ACOs' future.

Even worse, there's a government-generated health care bubble. The looming budget crisis will force Washington DC to retrench.  Many large provider organizations and ACOs, caring for tens of thousands of patients with thousands of full-time employees, will be deemed "too big to fail."  That "popping" noise will announced the start of a very destabilized market.

Jaan then predicts in a manner that leaves me wondering whether he is optimistic or pessimistic:

Coming in the wake of all this underfunded wreckage will be second generation provider-led accountable organizations. They’ll use the 2012-2014 time period to build a patient-centered culture, learn about insurance risk, invest in care management and prepare for the lean times ahead. They will focus on a) the 20% of patients who are responsible for 80% of the costs, and b) understand bundled payment arrangements.  That’s when having strong physician leadership, fully aligned care management-medical homes and enterprise-wide medical decision support will mean the difference between merely surviving and thriving.

A friend, who defines himself as a closet radical said, upon reading all of this, "Throw all the balls in the air and something good might happen, but it will be messy."  That's one word.


Anonymous said...

I am the closet radical. To elaborate, I feel that the time is long past for the slow incremental change advocated by those with something to lose (providers and insurers); we patients/taxpayers cannot afford, either literally or in safety terms, incremental change. The government, or whomever else tries, is almost certain to get it wrong the first time around in redesign attempts, but such is the nature of radical change. The key is to overcome the tendency quoted in your book, Paul, that "the momentum is with inertia." We most certainly cannot go back to where we were, whether the individual mandate is overturned or not.

clsmt said...

I keep waiting for you to talk about Kaiser as both a good and bad example of an ACO.

As a 40 year member, I've received both good and bad care from Kaiser but moving forward, Kaiser or systems that are like it are the only ones poised to take advantage of ACOs and the payment systems that come with them. Hospitals, insurance companies and provider groups from unintegrated systems are going to rip each other apart through the transition but there are some organizations like Kaiser that are already there - and for the next 10 years, those systems will gain ground and provide higher quality care for lower cost because they aren't wasting time and money on fights internal to their ACO.

Anonymous said...

Is this about the "death panel"forerunner ..??