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The work in health care reform is just beginning

Steve Shortell, dean emeritus, School of Public Health | June 2, 2010

The news of health care reform has settled down, but the work in making it work has not. There are some serious challenges ahead. The new law promises to bring more people into the U.S. healthcare system, so it’s even more important to find better ways to keep people healthier, deliver higher quality medical care, and curb the growth in health care costs.  We’re going to see changes in the health care market and a greater focus on value.

I’ve co-authored a policy brief that highlights a concept that deserves more attention: the Accountable Care Organization (ACO).  An ACO is a formal grouping of doctors and potentially hospitals and others (laboratories, pharmacies, etc.) who agree to be accountable for both the quality and cost of care.  This is a change from the current model of care, in which doctors tend to work solo or in small practices that don’t coordinate with hospitals or each other.  The way doctors get paid (most specialists get paid a fee for every service or test they perform) doesn’t create incentives for them to cut back on unnecessary care.  This costs our country a lot of money.  And it doesn’t guarantee quality.

We need to create incentives for doctors to coordinate with each other and with hospitals so that they deliver the right level of care, but without sacrificing quality.  ACOs reward value.  In other words, doctors and other providers in the ACO would not be rewarded if cutting back on costs compromises their patients’ health.

A recent study of one form of ACO (Health Affairs, May 2010, by Weeks et al.) suggests cost savings of 3.6%, which represents $15 billion per year for Medicare beneficiaries and over ten years a savings of $150 billion, making a substantial contribution to the estimated $940 billion cost of the new health care reform law. The health care reform law encourages fee-for-service Medicare providers to create ACOs and also sets up a pediatric demonstration project to test how well ACOs work for children in Medicaid.

What’s in it for patients?  Better coordinated care across a wide range of medical providers (including shared medical records and follow-up after hospital discharge), reducing unnecessary hospital admissions and preventable re-admissions and with greater patient involvement in their care.

What’s in it for doctors?  Payments that reward prevention, care coordination, and chronic disease management, achieving better patient outcomes and sharing in savings.

What’s in it for the U.S. health care system?  Slowing the growth in health care costs and preserving access to care over time.

Additional details on implementing ACOs are online.

Comments to “The work in health care reform is just beginning

  1. WOW!
    Terrible, one sided view. The bill is quite bad. The biggest of reasons being that it further deteriorates the doctor-patient relationship because (by law and under penalty of law with the IRS as collection agency) cements Insurance companies in between docs and patients. The HMO’s track record speaks for itself, talk about conflict of interest, between paying for people’s health and making profit?
    Healthcare is so expensive in this country because people are SO UNHEALTHY, and you have a typical middleman, toll, or collector taking money before ANY money is allocated to paying the medical claims.
    The only thing docs can be blamed for is being foolish for ceding control of their realm (they study minimal 7+ yrs to become experts), to people who have financial interests in the healthcare field.
    Docs need to begin with holding their labor, cease participating in any and all insurance contracts, make patients pay for services, and they seek reimbursement from their HMO’s.
    Ask yourself, WHAT BROUGHT DOWN THE COST OF PLASTIC SURGERY????
    The obvious answer is the market, docs no longer have the luxury of being apolitical and trusting the powers that be. The AMA sold them out (CHEAP at that!!!!!!!!!) for a monopoly on coding books, to pass this awful bill.

  2. What is unfortunate is the natural health practitioners were left out of the bill. It is amazing to be that medicine, as it is currently practiced, is en route to bankrupt the country and we are basically continuing headlong without any really meaningful change.

  3. Doctors in ACOs have a greater incentive to deliver quality?
    That’s going too far.
    It is more logical to say that they
    have an incentive to under-treat, except in cases
    where the cost of undertreatment is unambiguous.
    Hospital-borne infections are such a case.
    But where there are uncertainties, and difficulties
    of proving neglect (and in health care there are many
    such cases), a careful economist should assume
    that ACOs will err on the side of profit.

  4. A number of recent articles suggest that as result of a long period of mergers and consolidations, Hospitals have gained the upper hand in negotiations with insurance companies and other payers and have been able to drive prices up.

    Bundled or episode-based payments to Accountable Care Organizations (ACOs) should, in theory, be able to hold prices down by removing the financial incentive for providers to perform more procedures.

    However, the frequent affilation of ACO’s to the powerful Hospital groups that have been so successful in obtaining higher prices, and the shrinking numbers of primary care physicians able to assume the lead role in managing patient care raises concerns that market forces could overwhelm the positive effects of adjusting financial incentives.

  5. I have a question on hospital preventible re-admissions: Do you have any statistics on this subject, like what is the rate per capita and how does the United States compare to other countries?

  6. From the UK, by the way: Is all of the US health service private – i.e. it’s not provided by the state through means of tax payers money? Is it a case of if you need treatment – either get insurance or pay for services used?

  7. Nice blog. I like this topic because the health care reform is a very important feature in our life. I am living in a small country where health care is at a minimum.

  8. “We’re going to see changes in the health care market and a greater focus on value.”

    Real health care reform was never seriously considered. When you can still use “market” and “health care” in the same sentence, it isn’t reform.

    Imagine for a moment that your words here are a presentation you’re giving to an auditorium full of Americans not your peers. Americans supporting families on household incomes under $50,000. On payday, the head of the household sits at the kitchen table paying the bills. She knows they will run out of food money before the end of the month, but still she can’t pay all the bills. There is no money to pay doctors or buy medications.

    What will you say to these people?

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