- Accountable care organizations (ACOs) are on the tip of many a healthcare executive’s tongue.
There is often a comfort and ease to the idea of reflection within the healthcare industry, especially within the realm of ACO implications. Looking back and analyzing what worked and what failed is generally easier than successfully surmising upon what is around the bend in the road. It is often more difficult to comprehend a currently developing situation. Just as a driver cannot continuously focus on a rearview mirror without successfully moving forward, the healthcare industry must look ahead while continuously monitoring what has come before to strengthen its financial backbone.
When it comes to ACOs, the healthcare industry habitually struggles with bridging the gap between foreshadowing certain pieces peeking through along the upcoming horizon and collected remnants from what is still portrayed within the rearview mirror.
As the first of a two-part RevCycleIntelligence.com series, Bruce Hallowell, Managing Director at Navigant, discusses the importance of ACOs as they gain more prominence within the healthcare industry. Hallowell discusses why the active consideration of past algorithms and struggles helps pave the way for the creation of future opportunities regarding patient engagement and revenue cycle advancement.
RevCycleIntelligence.com: Will ACOS lead to higher patient engagement?
Bruce Hallowell: An ACO is trying to make people accountable for the outcomes but it doesn’t drive patient behavior. They’re two separate animals. The way it’s structured, I have to get the patient somewhat engaged to the health organization if I’m going to make money. ACOs are really capitation at a service level at times. It’s a requirement of how it’s going to end up working. If I can’t control the patient’s behavior and engagement, the patient is going to go wherever they want to go. What that means is that the ACO will be unsuccessful in cutting cost.
It’s an interesting experiment right now. There’s not a lot of them that are up and running that are real successful because they can’t control the patients. If I can’t control the patient, I can’t control the costs, and I don’t get the outcomes, which is the whole idea behind an ACO. Is there a way for the provider to do that? Not really. There’s no incentive for the patient to engage in the provider that’s actually taking the risk.
RCI.com: Is capitation the answer to the cost of healthcare?
BH: There’s a fallacy around capitation. Capitation is a one-time savings. ACOs are really capitation at the service level. It’s really a one-time savings. I don’t think it’s the answer to the cost of healthcare. It’s kind of like we took something and we repackaged it thinking that it would resolve something when it didn’t actually work the first time. When we look at it, we need to look at it from a holistic standpoint, looking at the drivers of cost and just because someone’s at risk doesn’t mean the cost goes down.
RCI.com: Will ACOs promote patient engagement?
BH: I don’t think it’s the vehicle to accomplish patient engagement. The vehicle that people are using right now is high deductible plans which is a double edged sword because, yes I get patient engagement but I’m also putting patients more in debt and raising the self-pay and making the self-pay and bad debt portion of healthcare higher because, yes, there’s certain patients that will engage but there’s certain patients that will not.
We learned that with managed Medicaid. We put people on managed Medicaid and the only one who got punished was providers because the Medicaid patient is not going to pay the bill anyway, they’ll go wherever they want to go. I can’t change behavior.
RCI.com: What are the greatest long term ACO implications for healthcare providers and payers?
BH: What ACOs were originally designed to do is make people share and work with a system as a healthcare delivery system which is not a wholly owned company, but what they want is to do the work of the system through the patient. If I want to control the market, I’m going to control the ACO because I’m the big dog in town. I can’t do it by myself because it doesn’t control behavior.
If I don’t engage the rest of my partners in the delivery system, it’s going to fail. But if I can engage the rest of them, we could probably get a success. I don’t think the healthcare provider industry is ready for that. Or even the insurance companies which have been trying to do that forever.
The problem with insurance companies is they’re trying to cut costs because they’re all trying to drive care. When they became part of an ACO, it’s a different story. What they’re trying to do is then limit risk.
We have two separate animals. An insurance company does everything in its power to limit risk. A provider does everything in its power to make money so they can pay its bills. The two don’t align with each other. That’s why when you look at the future, it’s going to be tough. It’s another example of the government trying to fix something it doesn’t totally understand.