More than 60 accountable care organizations have sprung up since November 2011, and the number of accountable care organizations nationwide has increased 38 percent over that time period, according to a recent Leavitt Partners white paper. The white paper discusses entities that self-designate as ACOs, have joined Medicare ACO arrangements or are embracing the goals of accountable care under a different name.
Here, co-author of the white paper, Andrew Croshaw, MBA, a partner with Leavitt who specializes in healthcare practices, shares five findings from his team's analysis of ACO developments nationwide.
1. The number and types of ACOs are expanding. With the addition of 61 ACOs in the last eight months, there are ACOs in 45 states, the District of Columbia and Puerto Rico. ACOs are using a broad range of reimbursement models — from largely fee-for-service models to full-global capitation models and everything in between.
"One reason we are seeing so many models is because these agreements can be structured in ways that meet providers where they are," Mr. Croshaw says.
There are variations in how ACOs are creating the infrastructure to coordinate care. Some integrated health systems are highly sophisticated in the deployment of care provision and care coordination assets. Conversely, physician groups are approaching accountable care with a lighter footprint. The use of care coordinators also varies. Some ACOs have clinical pharmacists on staff, and others utilize medical professionals to provide outreach to their patient population. Social workers, in some cases, may even get involved with high-risk patients. Additionally, clinics are extending the amount of open hours, and hospitalists are increasingly being used to manage the inpatient care for patients in an ACO.
"There also seems be an enthusiasm for ACO models that involve smaller physician groups," Mr. Croshaw notes.
2. ACO growth is most prevalent in large metropolitan regions. In general, ACOs are popping up in larger urban regions, often with multiple ACOs competing in the same market.
While we can't definitely explain this tendency, Mr. Croshaw says it is possible that, unlike in an urban setting where patient resources are in close proximity, rural hospitals and providers might have problems keeping in contact with patients in an enlarged, sometimes remote geographical region. The long distance between patient populations and providers could make it more difficult to enlist the kind of accountable, long-term care solutions called for in an ACO.
3. Hospitals continue to be the primary backer of ACOs, but the role of physician groups is increasing. Of the 221 total ACOs Leavitt Partners tracked in its white paper, 118 are hospital-led, while seventy ACOs are primarily backed by physician groups.
There are several variables at play here, Mr. Croshaw says. First, hospitals have the brick and mortar investment and fixed service locations to offer the care an ACO model calls for. Hospitals also have more financial capital than most physician groups. Additionally, hospitals may feel somewhat on the defensive and obligated to stay relevant as care delivery models shift.
"There's a real risk as the game changes to prevention, wellness and chronic disease management," Mr. Croshaw says. "There's a defensive motivation for hospitals to play, to buy out some assets."
Hospitals may also be joining ACOs, in an offensive move, to stay on top of an overall healthcare payment shift away from fee-for-service to value-based payment. Preventative programs that cut healthcare costs will financially hurt hospital unless they develop the breadth to benefit from prevention and wellness care.
"Hospitals, like other care providers, have the motivation to be developing competency for these new delivery models," Mr. Croshaw says.
However, he predicts hospitals will take their time moving to ACO models, evaluating what's in their best interest.
"Many hospitals will be more cautious about making the transition to accountable care because of the difficulty of changing their business model," he says.
As ACO models continue to evolve, physician groups may be more flexible and better positioned to take the lead in smaller, less expensive ACO arrangements, he adds.
The number of physician-led ACOs nearly doubled during the last eight months; the number of hospital-led ACOs increased too, but at a lesser rate, according to the Leavitt white paper.
4. Medicare ACOs are restricted; commercial ACOs are expanding. The problem CMS faces with the Medicare Shared Savings Program is that it is not a pilot or demonstration, but a federal program. There's almost an inherent obstacle in that structure, Mr. Croshaw says.
"CMS deals with political sensitivities, rulemaking, regulation and process for public comment," he says. "And they have to build a program that works for the country. Structurally, CMS is not built to innovate so much as to back innovation."
Nevertheless, CMS has played a role in advancing the idea of accountable care.
"They move the market, there's no question about that," he says. "But when you're doing a design-build like this, there's an incredible amount of tweaking and agility that needs to happen."
ACOs in the private sector are not bound to the same restrictions as Medicare ACOs and have more of an opportunity to experiment with arrangements and structure. They are experimenting with more varied approaches to payment and care coordination, and the total number of private ACOs nationwide outnumbers Medicare ACOs four to one.
"It's hugely important that the private sector has concluded it needs to be in the ACO game," he says. "That's really how change will happen."
Mr. Croshaw says CMS needs to be as flexible and inclusive as it can in order to promote a shared public-private vision for ACOs.
"CMS needs to be close enough with incentives and quality reporting that it's possible for providers to participate in private sector arrangements and move roughly in the same direction with public payors, too" he says.
5. The success of any ACO model over another is undetermined. While the number and types of ACOs are growing nationwide, it remains to be seen if one model is more effective than another. There just isn't enough data or conclusive evidence to make a case that one ACO has achieved its goal of stabilizing or reducing costs while improving patient care.
However, there is one thing that can't be denied, Mr. Croshaw says. "There is legitimacy to the momentum here — there's energy in the ACO movement."
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Here, co-author of the white paper, Andrew Croshaw, MBA, a partner with Leavitt who specializes in healthcare practices, shares five findings from his team's analysis of ACO developments nationwide.
1. The number and types of ACOs are expanding. With the addition of 61 ACOs in the last eight months, there are ACOs in 45 states, the District of Columbia and Puerto Rico. ACOs are using a broad range of reimbursement models — from largely fee-for-service models to full-global capitation models and everything in between.
"One reason we are seeing so many models is because these agreements can be structured in ways that meet providers where they are," Mr. Croshaw says.
There are variations in how ACOs are creating the infrastructure to coordinate care. Some integrated health systems are highly sophisticated in the deployment of care provision and care coordination assets. Conversely, physician groups are approaching accountable care with a lighter footprint. The use of care coordinators also varies. Some ACOs have clinical pharmacists on staff, and others utilize medical professionals to provide outreach to their patient population. Social workers, in some cases, may even get involved with high-risk patients. Additionally, clinics are extending the amount of open hours, and hospitalists are increasingly being used to manage the inpatient care for patients in an ACO.
"There also seems be an enthusiasm for ACO models that involve smaller physician groups," Mr. Croshaw notes.
2. ACO growth is most prevalent in large metropolitan regions. In general, ACOs are popping up in larger urban regions, often with multiple ACOs competing in the same market.
While we can't definitely explain this tendency, Mr. Croshaw says it is possible that, unlike in an urban setting where patient resources are in close proximity, rural hospitals and providers might have problems keeping in contact with patients in an enlarged, sometimes remote geographical region. The long distance between patient populations and providers could make it more difficult to enlist the kind of accountable, long-term care solutions called for in an ACO.
3. Hospitals continue to be the primary backer of ACOs, but the role of physician groups is increasing. Of the 221 total ACOs Leavitt Partners tracked in its white paper, 118 are hospital-led, while seventy ACOs are primarily backed by physician groups.
There are several variables at play here, Mr. Croshaw says. First, hospitals have the brick and mortar investment and fixed service locations to offer the care an ACO model calls for. Hospitals also have more financial capital than most physician groups. Additionally, hospitals may feel somewhat on the defensive and obligated to stay relevant as care delivery models shift.
"There's a real risk as the game changes to prevention, wellness and chronic disease management," Mr. Croshaw says. "There's a defensive motivation for hospitals to play, to buy out some assets."
Hospitals may also be joining ACOs, in an offensive move, to stay on top of an overall healthcare payment shift away from fee-for-service to value-based payment. Preventative programs that cut healthcare costs will financially hurt hospital unless they develop the breadth to benefit from prevention and wellness care.
"Hospitals, like other care providers, have the motivation to be developing competency for these new delivery models," Mr. Croshaw says.
However, he predicts hospitals will take their time moving to ACO models, evaluating what's in their best interest.
"Many hospitals will be more cautious about making the transition to accountable care because of the difficulty of changing their business model," he says.
As ACO models continue to evolve, physician groups may be more flexible and better positioned to take the lead in smaller, less expensive ACO arrangements, he adds.
The number of physician-led ACOs nearly doubled during the last eight months; the number of hospital-led ACOs increased too, but at a lesser rate, according to the Leavitt white paper.
4. Medicare ACOs are restricted; commercial ACOs are expanding. The problem CMS faces with the Medicare Shared Savings Program is that it is not a pilot or demonstration, but a federal program. There's almost an inherent obstacle in that structure, Mr. Croshaw says.
"CMS deals with political sensitivities, rulemaking, regulation and process for public comment," he says. "And they have to build a program that works for the country. Structurally, CMS is not built to innovate so much as to back innovation."
Nevertheless, CMS has played a role in advancing the idea of accountable care.
"They move the market, there's no question about that," he says. "But when you're doing a design-build like this, there's an incredible amount of tweaking and agility that needs to happen."
ACOs in the private sector are not bound to the same restrictions as Medicare ACOs and have more of an opportunity to experiment with arrangements and structure. They are experimenting with more varied approaches to payment and care coordination, and the total number of private ACOs nationwide outnumbers Medicare ACOs four to one.
"It's hugely important that the private sector has concluded it needs to be in the ACO game," he says. "That's really how change will happen."
Mr. Croshaw says CMS needs to be as flexible and inclusive as it can in order to promote a shared public-private vision for ACOs.
"CMS needs to be close enough with incentives and quality reporting that it's possible for providers to participate in private sector arrangements and move roughly in the same direction with public payors, too" he says.
5. The success of any ACO model over another is undetermined. While the number and types of ACOs are growing nationwide, it remains to be seen if one model is more effective than another. There just isn't enough data or conclusive evidence to make a case that one ACO has achieved its goal of stabilizing or reducing costs while improving patient care.
However, there is one thing that can't be denied, Mr. Croshaw says. "There is legitimacy to the momentum here — there's energy in the ACO movement."
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