Rethinking Accountable Care
Accountable care organizations are the creation of the government. As such they come with a set of rules. There are rules about who can organize ACOs and who cannot and the extent to which ACOs must be integrated. There are rules about how costs will be shared between the government and the ACOs. There are 65 pay for performance quality measures. And there are still pending rules that may allow ACOs to skirt antitrust laws. Once these rules are in place, they will evolve slowly if at all, even if newer and better ways to deliver care emerge. (More to the point, rules will squelch incentives to develop newer and better ways to deliver care.)
I believe strongly in viewing ACOs through the lens of business strategy and when I do I remain skeptical. But I am not presumptuous enough to claim that I know the truth. Nor would I set national policy based on how I view the world. I don’t know for certain whether integration or virtual organizations or something in-between will work best. But I do know how we can find out – put them to the market test.…..Give seniors vouchers and let them face the marginal costs of their decisions. Risk-adjust Medicare payments to plans and do whatever else is necessary to limit selection. Get rid of tax subsidies for private insurance. Publish plan level quality data – there are some amazing advances in patient reported outcomes data that would provide meaningful comparisons. These are all reasonable government intrusions, providing a context for competition but leaving plans free to choose how they wish to create value for their enrollees.
Full post by David Dranove at The Health Care Blog worth reading.
I think David is correct that once created, these organizations will be in a straightjacket and unable to adjust as they learn. Economist Tim Harford gave a TED speech recently on experimentation. Organizations advance because they can experiment and vary their strategies and reject the ones that don’t work. Success is always born of failure. My fear is the rules that govern ACOs will not allow firms to benefit from their learning curve.
What?? ACOs are not going to work??? You must be kidding me.
As I call them- All Controlling Organizations- they are Managed Care/HMOs in sheep’s clothing. Since they have been developed by a think tank and never tried in the real world they will fail miserably and morph into something else. When all else fails maybe we’ll get back to a market where patients control the costs and we physicians are beholden to them and not the insurance whether private first dollar or gov’t no dollar coverage.
Good post. Surprised to see it at The Health Care Blog.
There are major healthcare organizations that are doing things that are similar to what ACO’s are supposed to do. However, you don’t see Kaiser or Geisinger issuing press releases about how they plan to apply for ACO status (at least to my knowledge). I think it’s because the risks are too high, and their current business models are working. Why change?
The organizations that have an incentive to become ACO’s are those that are having trouble with operations and need to make changes.