Saturday, August 18, 2012

Well, duh! A wish and a hope is not a policy.

Folks who are urging the adoption of risk-based provider contracts seem to forget the basics:  To take on risk, you have understand the degree of risk you are taking on and how to manage it, and you need to have a balance sheet strong enough to take on that risk.  Kaiser Health News reports:

Few hospitals interested in becoming accountable care organizations are ready to take on financial risk, according to a survey released Friday from The Commonwealth Fund.

“We’re really still at the very beginning of the adoption curve of the ACO model,” says lead author Anne-Marie Audet, who researches health system quality and efficiency at Commonwealth. “The challenge is that hospitals are still not ready to assume financial risk.”

There are already 154 ACOs serving nearly 2.4 million Medicare beneficiaries, and dozens more ACOs are involved in partnerships with private insurers. But so far, the majority of ACOs are pursuing models that allow them to share in any savings they achieve without losing money if they fail to cut costs. In other words, there’s a lot of carrot but not much stick.

But only one in five hospitals pursuing an ACO model reported that they were using data to predict which patients were most likely to be in poor health and need more services—a significant gap in their ability to manage risk.

We are not there yet, and the future is uncertain, notwithstanding Ms. Audet's optimism.  Why is it that we expect things to change?  What is it in the future of hospital finances that will make them more interested in taking on risk in the future?  Do we expect their financial capacity for losses to grow?  Do we expect that there will be truly integrated care across the spectrum of care, including community-based facilities like nursing homes and rehabilitation hospitals?

This is a policy direction based on a wish and a hope, not a rigorous assessment of its likelihood of success.


Neal said...

Some of the larger Boston hospitals may be able to take on the risk. Watch how quickly the regulators jump in when smaller regional hospitals start shedding high risk departments or go further into debt.

@docweighsin said...

Agree with your closing comments, Paul. We have seen the lists naming the organizations that have been designated as ACOs. But most of us have little idea about their capability (and desire) to actually do the hard work to transform their delivery systems and deliver on the promise. I worry that failure of a significant percentage of them will lead to a sacking of the program (think the MC disease management pilots) and a return to the status quo. If we were discouraged and unable to attempt reform for a decated after the failure of the Clinton attempt at reform, we will really be paralyzed into a long-lasting inaction if ACA & ACOs are a bust.

Barry said...

Thank you for your consistent, independent, fact-based, honest and persistent analysis of Mass health care reform. Not too much of that around these days.