HANOVER, NH – Accountable care organizations may be the future of the healthcare delivery system, but disagreement exists about the economic impact on providers.
A recent article in the New England Journal of Medicine says healthcare organizations rushing to join or form ACOs may experience disappointing short-term financial results.
"The ACO Model: A Three-Year Financial Loss?" suggests that most ACO participants should expect to incur substantial costs that will not be offset by financial gains for at least three years.
“We were very conservative in the article, as we did not include the operating costs for year two and year three of the program. If we had done so, the financial risks would be even higher,” said Trent Haywood, MD, one of the article’s authors and chief medical officer at VHA.
Haywood and co-author Keith Kosel drew on data from the Centers for Medicare and Medicaid Services’ Physician Group Practice Demonstration Project, which ran from 2005 to 2010.
“We are not suggesting that hospitals shouldn't explore ACOs, but they need to understand that if CMS doesn’t fix flaws in the current payment model, it may take as long as five to seven years or longer before the ACO generates a financial benefit,” said Kosel, senior director of the social sciences practice at VHA.
In contrast, some ACO projects organized by health insurer CIGNA are achieving lowered growth in costs while also improving quality of care, according to Dick Salmon, the company’s national medical director for performance measurement and improvement.
A project with the Dartmouth-Hitchcock Medical Center in Hanover, N.H., saw providers closing gaps in care 10 times better than the market average, while another program at the Cigna Medical Group in Phoenix, Ariz., has lowered annual average costs per patient by $336.
“We expect a focus on coordinated, comprehensive care will … result in greater value through better outcomes for patients and lower overall medical costs,” said Salmon. “We’re still in the early stages, but we’re clearly on the right track toward achieving these goals, which is why we plan a major expansion of these programs in 2011.”
CIGNA is running eight accountable care programs throughout the country and participating in four multi-payer pilots. According to Salmon, the company expects to expand that to as many 30 programs by the end of the year.
Through the programs, CIGNA is sharing “gaps in care” data with care coordinators at participating providers.
“Identifying patients who may have diabetes and helping them control their blood sugar level, or ensuring that someone being discharged from the hospital receives appropriate follow-up care to prevent readmission, presents a significant opportunity for improving health and lowering overall medical costs,” said Barbara Walters, MD, senior medical director for Dartmouth-Hitchcock.
Topic: