The Next Hula Hoop

Health care cost fads come and go – in the 1980s, it was HMOs; in the 1990s and into the 2000s, it was consumer-driven plans.  In 2010, the Affordable Care Act supported “Accountable Care Organizations” or “ACOs” (pronounced Ay-See-Ohs.)

Ho hum.

But this time, we may be on to something. 

ACOs are networks of hospitals, doctors, and other care providers who take charge of keeping patients healthy.  Unlike HMOs, where the doctors were rewarded for spending less on care, ACOs have to meet quality and outcome standards.  So, for example, an ACO would not only keep diabetics out of the hospital but also ensure that these patients were being monitored, getting recommended tests, and following treatment plans.  Only if the ACO meets the quality goals AND spends less on care, do they get a bonus payment from the plan.

And it just might work: Medicare patients in an arrangement similar to ACOs spent less than their peers who saw “regular” Medicare doctors.  A study by the Dartmouth Institute for Health Policy and Clinical Practice found that the ACO arrangement slowed the per-patient cost growth by $532 per year, or 5 percent.  (See New Medical Care Networks Show Savings, New York Times 9/11/2012)

One physician’s group in the study reduced annual spending per patient by $2,499.  Even the physician practice that spent the least per patient before the study was able to cut costs by almost $1,000.

Perhaps patients will accept the ACO plans, though they have some features that are similar to an HMO.  HMOs came to be rejected, as patients feared that their doctors were putting their bonus ahead of their patients.  “Is it really okay for me to leave the hospital today, or is it that you don’t want your bonus cut because your patients had too many hospital days?”

Patient satisfaction is required to be part of the ACO’s quality goals.  This should encourage doctors to avoid cutting corners on care.   Patient satisfaction will have to be measured – likely by surveys –and factored in to any quality-related bonuses.

I’m encouraged by the study of Medicare patients, but Medicare patients are not the same as a working-age group.  One could argue that Medicare patients are more intensively needy, when it comes to medical services.  Therefore, an ACO should find a working age group even easier to manage.

The future will show whether ACOs are here to stay, or are just another hula-hoop strategy of decades past.

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