Texas Tech University Health Sciences Center
Is the New ACO the Solution?

Is the New ACO the Solution?

ceo_minuteFor those of you who read last week’s column on “narrow networks” and the problems I described when different providers within a particular hospital are not all on the same insurance plans as the hospital, you’ll recall my example from when I was a hospital administrator, and one of the anesthesiologist did not accept the insurance of our local school district, which the hospital did. I ended by saying that an Accountable Care Organizations (ACO) might remedy that problem.

Now, I will say upfront, that an ACO would create new problems. But, it would have all providers in the ACO accepting the same insurance plans. It would not eliminate the “narrow network” issue because the ACO would have a set panel of providers. However, I would say from a business perspective, it really has to be a “narrow network” if it is to accomplish its goals of coordinating services and saving money.

An ACO is a group of doctors, hospitals and other health care providers who come together to give coordinated, high-quality care to the patients they serve. There are economic incentives to coordinate care consisting of rewards when costs are lowered and quality improved.

Perhaps it is idealistic, but coordinated care might, at least in theory, ensure patients (especially the chronically ill) receive the “right care at the right time.” The big goal is to avoid unnecessary duplication of services, prevent medical errors and improve the patient experience. Private commercial payers, such as Cigna, Blue Cross and Aetna are supporting ACO formation in the hope that the concept will save money and improve care. Texas Tech Physicians has been recently approached about being part of an ACO. We have not yet decided if it is in our best interest.

I have worked in health care so long I remember the Health Management Organization (HMO) movement of the 1990s. The major health care system I worked for in the Fort Worth area had one, and it proved very difficult to manage. After a few successful years, it was sold to another company because it was losing millions of dollars annually.

We found that being both the insurer and the provider created serious conflicts. I am talking about a basic tension between a hospital company, which depends on revenue from patients, procedures and tests, and an insurance company, which, in a sense, tries to keep folks away from these same services.  I am not talking about in an emergency or when care was needed, but they are concerned with the avoidance of duplication and so forth. The tension of overseeing both of these goals ultimately became too great.

So, is an ACO just the 2015 version of an HMO?  Some critics say that it is. But, I think the key is in aligning incentives and rewarding providers for keeping people healthy and happy. The HMO movement failed, in my opinion, because it mainly focused on reducing payments to providers and barely paid “lip service” to the concept of prevention and wellness. I am not naive, ACOs will have their own problems, but perhaps fewer than a fractured system in which providers are not aligned and care not coordinated.