What is an Accountable Care Organization? (ACO)

What is an Accountable Care Organization? (ACO)

Accountable Care Organizations (better known by their acronym ACO) are among the latest & greatest attempts to gain control of spiraling, out-of-control health care costs.  The Affordable Heath Care Act (better known as “Obama Care”) is convoluted and needs some serious tweaking.  But the overall political purpose of the legislation is to provide affordable health care to the general population (expanded coverage) and at a lower cost:  more productivity, quality, efficiency and streamlined patient-care processes.

The good news is that the ACO framework for Medicare and Medicaid is the most sensible and potentially the most effective way to achieve the very ambitious double goal of the Act:

  • Better care and increased quality of health services
  • Lower costs and streamlined processes of patient care

For those of us in business, we have seen this formula before:  “I want better results and lower expenses.”

More good news:  there are HUGE amounts of inefficiencies built into the current patient>provider>payer system.  In fact, it reminds me of the enormous gains in productivity we have achieved in the private sector over the past thirty years.  The numbers are impressive:  the Economic Policy Institute estimates that US productivity growth has nearly doubled in a generation.

In the public health care sector, many of these efficiency gains have yet to be realized.  Lean manufacturing has revolutionized factories around the world but lean public services, lean office solutions and lean health care are just now gaining traction thanks mostly to information technology, advanced networks and the move to digitized record keeping.

What is an Accountable Care Organization? (ACO) and why does it matter?

“Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.  The goal of coordinated care is to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.”

Now, here is the kicker:  “When an ACO succeeds both in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.” (source: CMS.gov)Member Firms

Politics aside (that’s a whole different debate), Section 3021 of the Act establishes a Center for Medicare and Medicaid Innovation.  The purpose of this “Innovation Center” is to find and implement new ways of delivering health care, reducing the overall cost of the service, all the while actually improving the quality of the care.

This is an extraordinarily worthy goal which will become a moral and economic imperative in the years ahead.  People everywhere are getting older and living longer – your family and mine too.  In the States, Medicare and Medicaid are coming under increasing pressure to fulfill their mandates, and they are slipping further and further behind.

ACOs are the best path forward we have seen to date.  Instead of each person, and each provider and each medical act being part of a siloed process carried out and invoiced and recorded separately, there is now an incentive to coordinate patient care across the value chain.

An ACO transforms the organization, delivery, and financing of care.  It replaces fragmented, uncoordinated care with an arrangement in which providers work together to achieve shared goals of better care at a lower total cost.  An ACO also preserves the ability of patients to choose and form an active partnership with the providers that best meet their own needs.

Alliance professionals and consultants are seeing outstanding results as doctors and administrators work together, across functions and departments to achieve the goals of better, measurable quality of care at a lower overall cost to the system, and by extension to society in general.  We are working to design and build new ACOs all over the country, with exciting developments in areas such as:

  • health care leadership training and priority-setting among all the stakeholders, learning how to work together and implement synergies and best practices ; redesign of the primary care function and the use of specialists ; quality measurement, feedback and reporting
  • use of health information technology and certified electronic health records ; updating, integrating, and maintaining clinical and financial data across clinical partners and from multiple sources ; integrating financial and clinical IT systems to assess and deal with risk and cost issues
  • patient > provider > payer contracting and payment interface improvements, administrative process re-engineering ; lean solutions

It is not perfect and it is not easy, but consultants and alliance professionals working with doctors and administrators to design, build and optimize the ACO partnership models are working hard towards solutions, not just standing still until the whole system collapses.  It is a worthy cause.  Kudos to those who are engaged in actions to make healthcare a little better quality, and a little less expensive than it was beforehand, and to turn the tide of ever escalating costs.

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