Will ACOs Fail?

The cHealth Blog is coming up on its 3rd anniversary and during that time I’ve taken my share of pot shots at organized medicine. Most implementations of connected health are in some way disruptive to the status quo, so I can’t help but point out those opportunities and barriers.

So I was surprised at my reaction to a recent editorial in the Wall Street Journal by Clayton Christensen and colleagues.  The main premise of the piece is that the concept of Accountable Care Organizations (ACOs) is misguided and that these organizations will be more likely to fail than not. I’ve been an admirer of Christensen’s work over the years and as you might expect, there is a lot to like in his WSJ piece.  However, as I watch healthcare providers in our integrated delivery system deal with the challenges of payment reform and accountable care, I am more optimistic than dismayed.  Let me go through the WSJ piece point by point and offer some thoughts.

For me, the first red flag is the assertion that ACOs are ‘latter day health maintenance organizations.’  The biggest difference in HMOs, as we experienced them, and ACOs are the locus of execution.  The HMO was a health plan-based organization.  With the exception of some of the early staff-model HMOs, these organizations were constructed to give providers financial guard rails without any tools for delivery reform.  The ACO is provider organization-centric.  I guess we can argue that this amounts to a ‘fox in the hen house’ situation, but as I see our own strategy unfold, I am optimistic. I see doctors saying things like, “This is how I always wanted to practice medicine.”  Giving provider organizations the financial risk is step one. They can use internal payment structures to motivate doctors to care for patients in more effective, but more efficient ways.  The IT tools at hand to facilitate this population-based payment management are breathtaking, from registries to data analytics to connected health. We’re using all of them at Partners and our goal is to transform care delivery.

The next logical misstep is saying that ACOs will not succeed without changing doctors’ behavior.  No argument with this premise on the surface. But I was puzzled by the lack of discussion of payment reform strategies (shared savings, bundled payments, full capitation) and how these will motivate changes in provider behavior.  It may surprise a number of people to learn that many of the doctors at Partners HealthCare (and elsewhere) are tired of the mouse’s wheel of fee-for-service reimbursement and welcoming of the opportunities to re-think care delivery.  I see MD thinking and behavior changing.  Whether it will change fast enough is still an open question.

Most ACOs are large organizations, and healthcare organizations are by nature conservative because we are overshadowed by our “do no harm” Hippocratic oath.  I’d love to speed up the process here at Partners, but I am comfortable that the process is well designed and will lead to the right changes in physician behavior.

Further along is the statement that we’ll not succeed without changing patient behavior.  This is where I find myself in resounding agreement with the WSJ authors.  If there is a flaw in the thinking of our government ACO architects, I’d say it’s here.  It’s not so much that we as providers can’t hold patients accountable for their health, though we can’t. But rather that the prevailing sentiment nationwide is that chronic illness is an accident that leaves patients as victims to be cared for and covered by insurance.  The most effective way to move patient/consumer accountability forward would be to acknowledge that lifestyle plays an enormous role in our most prevalent and costly illnesses.

Further, giving citizens healthcare premium rewards for evidence of improved health, and penalties for evidence of disregard for health would be a great step forward. Connected health tools enable that vision.  However, I don’t see any stomach for this in our politicians, so we will need to work within the current policy framework.  Some health plans are making progress in this arena.  And just because we don’t have this lever to pull, it does not mean we should abandon the whole concept.

As to the argument that ACOs will not save money, I think we have a chance.  At Partners there is a deliberate and sustained effort underway to make us more lean and efficient. I’m sure other providers are going through similar processes.  Is it enough? Probably not, but it’s a start and movement in the right direction.

I have to admit that were it not for my near complete agreement with the authors’ prescription for success, I probably would have ignored the piece and moved on. But the thinking articulated in the last half of the editorial is so compelling I had to write about it.

The first answer the authors propose is more use of tools such as retail clinics.  Couldn’t agree more.  The good news is that it appears this will happen with or without ACOs, because of consumer demand for simpler healthcare that is easy to access.  However, some provider organizations, notably the Geisinger Health System, are putting a big investment into the expansion of retail clinics.  I look forward to watching their results and in turn watching others adopt.

At the risk of having my telehealth colleagues throw rotten eggs and tomatoes at me, I’m going to suggest that the focus on interstate licensure as a barrier is overblown.  If you look at the market share penetration of telehealth and remote monitoring programs within any given state (patients managed in this way divided by total patients managed), I think you’ll see what I mean.  There is more than enough opportunity for expansion within a given state.  Of course, the ideal system would not be state based, but I don’t see this as a true barrier to telehealth adoption or to success of ACOs.

Last but by no means least is the nod that the authors give to the importance of connected health.  Of course, I agree with that!  Seriously, if we are going to use our current provider work force to care for the current patient base, plus the millions of new folks coming into the system due to access reform, we will have to expand our tool set beyond the tired old office visit.  Work at the Center for Connected Health has been building toward this vision for the last 10 years or so and we’ve managed to demonstrate better outcomes for chronic illness management, better patient engagement, and more efficient use of provider labor all with connected health. In fact, we were quite proud to see our work featured in a recent report from The Commonwealth Fund.

On balance, I congratulate the authors of the WSJ editorial for daring to buck the establishment.  And I suspect if we sat down over a cocktail, we’d agree far more than we’d disagree.  But in the end, I’m an optimist. I’m also pleased to see how our leadership and our providers are responding to the ACO call here at Partners, so I see greater chances of success than Christensen et al.

Where do you come down on this one?