ACOs that include hospitals have critical advantages

Accountable care organizations (ACOs) that include hospitals as key participants have certain advantages over ACOs that do not include hospitals (i.e., those that are primarily made up of medical practices or medical groups).

One reason is that hospitals tend to have more access to capital, says Greg Kennedy, research project manager with the ACO Research Team at the Dartmouth Institute for Healthcare Policy and Clinical Practice at Dartmouth College.

KennedyThe start-up costs with an ACO are huge, so better access to capital means ACO participants can hire case managers and registered nurses, says Kennedy, who was on the research team that recently published an article on ACOs in HealthAffairs. These additional staff members are the “machinery” that helps keep an ACO moving, he says.

Data sharing is another advantage hospitals provide, says Kennedy. Hospitals tend to be further ahead with having providers plugged in across the continuum of care. For example, by using fully integrated EHRs that the entire healthcare team can access. “That helps providers involved in patient care to provide consistency in the management of patients,” he says.

According to the Health Affairs article, 20% of U.S. hospitals were part of an ACO in 2014. Nonprofit or government-owned hospitals in urban areas or hospitals with a larger percentage of Medicare patients were more likely to be part of an ACO, found researchers. There were no differences between non-hospital ACOs and ACOs with hospitals in terms of their ability to manage hospital-related aspects of patient care; still, ACOs that included hospitals were more likely to offer more comprehensive services.

This research relies primarily on data from Pioneer ACOs and Medicare Shared Savings Program ACOs, rather than commercial payer ACOs, says Kennedy.

Next: Unique challenges faced by ACOs with hospitals  

Unique challenges faced by ACOs with hospitals  

Despite the advantages hospitals provide ACOs, ACOs that include hospitals face certain challenges that must be addressed. One is that incentives aren’t always aligned.

“We hear providers using the term ‘having one foot in two canoes,’ where they have one foot in the fee-for-service world and one foot in the value-based care world,” says Kennedy. “These hospitals have to be fiscally responsible, but that’s hard to do when an ACO includes a hospital that stands to benefit financially by admitting a patient, whereas the overall goal of the ACO is to reduce the cost of care while maintaining quality and decreasing the length of stay.”

HoustonIn successful ACOs, providers that were once fierce competitors come together as fierce collaborators, says Rob Houston, senior program officer at Hamilton, New Jersey-based Center for Healthcare Strategies, a nonprofit policy center focused on improving the health of low-income Americans.

For example, in Minnesota, nine provider organizations have banded together in Minneapolis/St. Paul as an ACO, he says. Houston also cites OneCare Vermont, which includes the state’s two largest hospitals and behavioral health providers that are all working together within an ACO.