Roundtable: Private market ACOs

December 1, 2011

The advent of ACOs will reshape healthcare delivery, however, the commercial market is positioned to drive the revolution much faster.

There is little doubt the advent of accountable care organizations (ACOs) and the Medicare Shared Savings program will reshape healthcare delivery for the next decade. However, the commercial market is positioned to drive the revolution of accountability at a faster pace.

Many believe the potential to squeeze costs out of the system is greater in the commercial market, and the flexibility offered by managed care arrangements will be more attractive to providers. For example, Medicare ACOs must serve 5,000 patients and report 33 quality measures. With a non-Medicare payer, the patient population might be smaller and the reporting measures less ambitious.

Providers also envision more potential bonus earnings coming from commercial insurers' ACO programs than from Medicare. As it is, hospitals and physician practices have resigned themselves to the inevitability of painful reductions in fees and increasingly more complex quality reporting requirements from the federal government.

As a benefit, commercial plans stand to gain financially from the ongoing development of quality improvement in their networks under ACO contracts. By sharing claims and clinical data, the payer and provider participants can work together to achieve beneficial
results.

MANAGED HEALTHCARE EXECUTIVE recently brought together four key thought leaders to discuss the potential of ACO arrangements in the commercial market.

MHE: What are the key ingredients of an ACO in the commercial market?

There needs to be a business structure where physicians, hospitals and other components of the delivery system can come together in a coherent whole to provide a meaningful percentage of the patient's total healthcare needs.

There needs to be health information technology. Virtually any business that seeks to provide a service efficiently uses technology and data to help them do that. Healthcare has been lagging, and in fact, many electronic medical records still do not support this important step. Getting the right kind of health information technology in place is foundational to taking cost out of the system.

Lindsey The final common pathway is the relationship between the physician and the patient. If our goal is efficiency, effectiveness and eliminating waste, not only do you need the IT infrastructure that creates the data, it has to be translatable to actionable information for the practice. We found that care improvement processes, such as Lean, have been very useful as well as a focus on provider practice variation and further attempts to engage your patients.

The medical home environment and the management of the medical home environment with the process improvement techniques that engage our docs are going to be key to the ultimate success.