Be ready to track ACO industry in wake of CMS ACO 2014 quality report

October 9, 2015

On the heels of the Centers for Medicare & Medicaid Services release of the Medicare accountable care organizations (ACO) 2014 quality and financial performance results, tracking the ACO industry for market shifts might be a wise move, according to one industry expert.

On the heels of the Centers for Medicare & Medicaid Services release of the Medicare accountable care organizations (ACO) 2014 quality and financial performance results, tracking the ACO industry for market shifts might be a wise move, according to one industry expert.

Boyd“If a local competitor using an ACO model is successful and starts using bonuses to invest in marketing, I would be very concerned,” says Drew Boyd, author, innovation expert, and a 17-year Johnson & Johnson veteran. “Of more concern is if the ACO concept gets on the radar screen of everyday consumers to the point where they prefer ACOs over non-ACOs-or vice versa. Once ACOs get into the consumer’s lexicon, it will become a whole new ballgame.”

Boyd offers three strategies: 

#1. If you’re in an ACO model now, look carefully at your clinical talent involved.

“Do you have an A-team delivering outstanding clinical results?” Boyd asks. “If not, you may be perceived as cutting corners to meet targets.”

#2. If you’re not in an ACO model, ask yourself “What would have to change for us to get on board?”

“Identifying these trigger points is helpful,” he says. “Good business model strategy is knowing what you want to do, but also knowing what you won’t do and why.”

#3. Keep an eye on the 2016 election.

“Democrats, if they win, may double down on ACOs to make good on the promise,” Boyd says. “That may lead to some attractive opportunities, but don’t wait until the election is over. Prepare now.”

 

NEXT: "Bleak" results regardless of the elections

 

Boyd calls the future of ACOs “bleak” regardless of the election results, for several reasons:

The analogy that ACO’s are like a car repair shop is completely wrong.

“Truth is, consumers don’t trust car mechanics, fearing they’ll make something else wrong with your car or install used parts. There’s no accountability,” Boyd says. “What we need is a ‘primary auto care’ mechanic who can hold the other mechanic accountable for good results. The same is true with ACOs. With one centralized team, there is no outside governance, while the current non-ACO model encourages dialogue and debate between different specialists.”

A team approach to medicine is a flawed idea.

“Teams suffer group think,” he says. “There may be one clinician who overpowers the others. Teams can suffer from the free-rider problem where some members hold back and count on the others to get the job done.”

ACOs may be attractive to the clinicians who have poor ratings in Healthgrades and other measures.

“They need more business, so ACOs give them a way to earn without as much scrutiny,” Boyd says. “ACOs may become a pool of clinicians who can’t make it on their own.”

ACOs create a virtual salary cap like what pro sports team experience.

“Salary caps cause teams to give up great talent and make other poor decisions to get under the cap,” Boyd says. “To reach targets, ACOs may defer investment in clinical resources and capabilities. Their intent is to deliver the same standard of care at a lower cost. But what may happen instead is-in order to meet targets-providers deliver a lower standard of care at a lower cost. That’s not what patients want.”

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