Will ACOs benefit healthcare?

The Affordable Care Act is the law of the land and is undeniably changing the landscape of healthcare in the United States. It is forcing hospitals, physicians and payers to restructure the manner in which healthcare is delivered, services coordinated and costs more effectively managed.
One of the ACA's most intriguing initiatives is its promotion of accountable care organizations, or ACOs. The concept is not a new one. An ACO is a contractual arrangement among groups of physicians, hospitals and/or other providers to coordinate care for an assigned population of patients with the goals of improving the quality of care and lowering the cost associated with those services.
Additionally, the potential cost savings or risks should be shared among all of the participants in any given ACO to encourage all to work together.
As soon as the ACA passed, hospitals and physician groups immediately began formulating plans or pilot programs to create or join ACOs. However, the benefit or risk was not entirely clear at that time, and still remains somewhat unclear. How would the participants distribute potential savings or costs and who would control the ACO? These questions are both fundamental and essential because they play a large role in shaping how the ACO is managed.
In July of this year, the Centers for Medicare and Medicaid Services published the first year results for the Pioneer Accountable Care Organization Program, the government's first shared savings and risk pilot program. The Pioneer ACO Program was limited to 32 participants already experienced with ACO-style coordination of care.
The data showed that all of the Pioneer ACOs improved patient care on quality measures such as cancer screening and controlling blood pressure, but only 18 of the 32 Pioneer participants managed to lower costs in the first year. Two of the participants lost money in the first year and, ultimately, nine decided to leave the program. The issue appeared to be concern about assuming risk and potentially owing money to the government.
One of the two Pioneer ACO participants that lost money in the first year indicated that its losses were attributable to the fact that its historical cost per patient target was already unusually low. This participant previously lowered costs before entering into the Pioneer ACO Program. This raises the question: to what extent, if any, will providers that have already managed to lower costs benefit financially from participating in a large multi-organization risk-sharing ACO?
As the purpose and initial results of the Pioneer ACO Program show, changing the culture of healthcare and payment models will take time. The shift away from fee for service to mostly risk based agreements will not occur overnight. Risk based agreements essentially place providers into the role of insurers because they benefit from the upside of treating patients in an efficient, coordinated manner for less than a predetermined payment while also bearing the risk of not rendering treatment below the payment level.
There are fears this could lead to rationing of care, but the ACO model provides an appropriate vehicle to manage costs required under a risk based contract, though not knowing which patients will be assigned to the ACO ahead of time may undermine the ability to fully manage costs.
Given the emphasis on care coordination and efficiency, it is the providers who are arguably in the best position to champion and drive the aims of an ACO. Providers are on the front lines of care and may best understand what changes are needed. Further, providers have traditionally been closer to the goals of an ACO, which may seem directly opposite to "old" hospital goals.
Another critical aspect of ACO success will be health information technology, namely electronic medical records. ACOs must be able to harness the potential offered by EMRs to gather a whole host of information, effectively assess it, and use it to improve the delivery of care. An ACO cannot just let data sit idle, but should make it a meaningful part of a physician's practice and a patient's experience.
It is too early to evaluate the potential long term financial or other benefits of different ACO models. The fact that the Pioneer ACOs results were mixed in the first year is not surprising, nor indefensible. Ideas should be given time to develop and grow into their potential before a final assessment is made. For the Pioneer ACO Program, and ACOs in general, let's see not only what year two brings, but years three, four and more.