ACO Definition and Challenges: Accountable Care Organization(s)


Health care is the most complex, knowledge-driven industry in the world, representing one of our most significant economic challenges. While the transition to a system of more accountable care will be evolutionary, real challenges exist in building successful accountable care organizations or supporting ACO-like operations. One core challenge will be the diversity of forms of ACOs; the Centers for Medicare & Medicaid Services definition will be one of many.

What lies ahead is the reorientation of decades of organizational processes and structures that long have supported fee-for-service payments, competition among providers, and strained relationships with payers. We are embarking on a transformation of epic proportions, one that requires the industry to come together with a common purpose. We need a laser focus on care coordination, quality improvement and cost reduction.

A key tenet of accountable care is to improve integration. ACOs are expected to implement a wide range of managerial, legal, clinical and other leadership structures. The goal is to ensure that the health and wellness of the population health is coordinated, the most cost-effective care is provided, clinical processes are streamlined and follow the best evidence, the necessary reporting is in place, and the payments and reimbursement are appropriate.

Last but not least, the ACO must demonstrate, in a variety of ways, its commitment to being patient-centered and to engaging patients in coordinating their care and overall health.

We are a network of individual practices of ACO professionals.

Shifting Perspectives and New Competencies

Accountable Care will require industry perspectives and health care delivery practices to shift:

  • from care providers working independently to collaborative teams of providers;
  • from treating individuals when they get sick to keeping groups of people healthy;
  • from emphasizing volumes to emphasizing outcomes;
  • from maximizing the use of resources and assets to applying appropriate levels of care at the right place;
  • from offering care at centralized facilities to providing care at sites convenient to patients;
  • from treating all patients the same to customizing health care for each patient;
  • from avoiding the sickest, chronically ill patients to providing special chronic care services;
  • from being responsible for those who seek services to being responsible for the needs of the community;
  • from putting forth best efforts to becoming high-reliability organizations.

Additionally, accountability will bring new performance and utilization risks to providers, as the focus shifts from optimizing business unit performance to optimizing network performance. At the same time, instead of maximizing the profitability of care, organizations will increase the volume of desired bundled episodes while controlling costs.

The Transformation Process...

As providers assess their risk tolerance, they must also strengthen their ability to coordinate several core processes in an accountable care environment. These core processes include

  • Identifying, assessing, stratifying and selecting target populations. It will become imperative for providers to store, access, maintain, derive and update population data and categories (stratification) from multiple sources. Additionally, within target populations, providers will select cohorts for specific programs based on predefined metrics (cost, utilization, outcomes).
  • Providing coordinated care interventions for individuals and populations. This includes patient-centered coordination of care events and activities in multiple care settings by one or more providers (e.g., identifying care gaps and situations requiring additional interventions, as well as managing care transitions). The aim is to coordinate care for the most complex patients through the health care system, taking their preferences and overall situation into consideration. In addition, coordinating the overall health of a select population (diabetics, elderly, well, etc.) will require proactive care, communication, education and outreach.
  • Providing high-quality care across the continuum. While this is an obvious goal for all providers, ACOs must facilitate cross-continuum medical care for active episodes and acute disease processes or for any patient outside of the defined goals of a target population. It also includes fine-tuning coordination among care team members, transition of care planning, targeting venues of care, establishing patient and family engagement initiatives, and monitoring and improving clinical performance.
  • Managing contracts and financial performance. With new payment models (bundled, shared savings) emerging, proactively understanding patient coverage and financial responsibility will be critical. Financial teams must have a solid handle on estimating reimbursement and associated payment distributions, carrying out predictive modeling for reimbursement contracts, measuring performance against contracts and predicting profitability, as well as integrating with other key processes to share information.
  • Monitoring, predicting and improving performance. With payment so tightly linked to quality and outcomes, tracking and measuring system performance in key areas become paramount in an accountable care environment. Under value-based purchasing programs, there will be real ramifications for poor care and rewards for improved care. Providers can work with their quality and clinical staff to adapt processes accordingly. In a value-based purchasing model, even low-performing areas can qualify for high payments if they demonstrate year-over-year improvement.
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