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.