ACO: Change agent or fad?

Aetna recently published results of two studies suggesting that ACOs can indeed cut Medicare enrollee costs. The results came from two medical groups – one in Ohio and one in Florida. The Florida group reduced inpatient hospital days by 37% and hospital readmissions by 27%. The Ohio group reduced inpatient days by 30% and hospital readmissions by 27%.  In each case the program started in 2009 – so not bad results for a 2 year program–right?

Recall that the goal of a Medicare ACO is to streamline care, reduce unnecessary care/procedures, focus more on patient health management than catastrophic treatment, thus leading to happier patients, more fulfilled providers and less medical cost per capita. So the concept seems to work and everybody is happy-right?

Well not everybody!  The Aetna study shows that  ACO success can be defined in terms of less procedures, inpatient days and use of resources  for a defined population.  And the results point to the intrinsic benefits that accompany better outcomes as well as healthier patients and less patient exposure (sometimes harmful)  to unnecessary procedures.  But that is just part of the story because the Hospital and the Physician–the ones who are doing less procedures than before and the hospital that is seeing its inpatient volume shrink -, they are dealing with the reality of revenue loss unless it can be replaced through  seeing more patients, increasing unit cost, cost-shifting to non ACO managed populations or limiting access to ACO participating patients, etc. — all those consequences that are an anathema to ACO believers.

Thus individual ACO enterprises may meet all the goals set out by CMS and the private health care sector but medical costs on a consolidated basis will still go up unless…..

Unless we as an industry, choose not to wait for the next health reform shoe to drop.  Instead, let us shift our attention away from experimenting on different populations with multiple cost cutting initiatives.  Let us focus on health care delivery and pricing solutions that cut across all populations and funding sources with the goal of extracting involuntary practitioner and consumer behavior changes with respect to health care delivery and individual responsibility for lifestyle choices.  Said differently: if everyone is riding the same train at full speed it becomes difficult and potentially harmful to jump off.

That brings me back to ACOs, the topic for this blog. I happen to think that ACOs, or rather the philosophical tenets that define an ACO, are here to stay and should and can become the foundation for the wholesale change required to change our approach to accessing and funding health care.  More about that later.