Monday, November 12, 2012

Fwd: qotd: Burns and Pauly take a critical look at accountable care organizations

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Subject: qotd: Burns and Pauly take a critical look at accountable care
Date: Mon, 12 Nov 2012 11:20:12 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Health Affairs
November 2012
Accountable Care Organizations May Have Difficulty Avoiding The Failures
Of Integrated Delivery Networks Of The 1990s
By Lawton R. Burns and Mark V. Pauly


Accountable care organizations are intended to improve the quality and
lower the cost of health care through several mechanisms, such as
disease management programs, care coordination, and aligning financial
incentives for hospitals and physicians. Providers employed several of
these mechanisms in forming the integrated delivery networks of the
1990s. The networks failed, however, because of heavy financial losses
stemming from hospitals' purchase of physician practices and their
inability to align incentives, garner capitated contracts, and develop
the infrastructure to manage risk. Although the current mechanisms
underlying accountable care organizations continue to evolve, whether
and how they will have an impact on quality and costs remains open to
question. Care coordination and information technology are proving more
complicated and expensive to implement than anticipated, providers may
lack the ability to implement these mechanisms, and primary care
providers are in short supply. As in the 1990s, success depends on
targeting specific populations, such as people with multiple chronic
conditions who need and may benefit from coordinated care.

Future Directions

What does that imply for the emergence, performance, and success of
accountable care organizations? It requires a reconsideration of our
earlier conjecture that the organizations will be more likely to improve
quality than to lower costs. With intense financial pressure from
Medicare generated by lower Medicare payments, the organizations may be
forced to limit costs — and, if they cannot do so by ridding their
systems of waste, perhaps to do so by achieving fewer quality improvements.

More generally, Medicare may wish to use accountable care organizations
to contain costs. In effect, the organizations will be told, "Here is
how much money you will get per patient, and you are not allowed to
charge any more; do the best you can with that."

This draconian incentive system will truly constitute a test of how much
waste there is in the system.

Comment: The Affordable Care Act includes several measures supposedly
to control health care spending, but analysis of the health policy
literature to date suggests that none of these will have more than a
negligible impact. Most hope is held out for accountable care
organizations (ACOs), but this report by Burns and Pauly suggests that
these new entities include many of the flaws of previous similar
efforts, primarily the failed integrated delivery networks of the 1990s.

In reading their full article you will understand better why we cannot
expect dramatic results from ACOs and the mechanisms that they would use
such as disease management, care coordination, realignment of financial
incentives, health information technology, electronic health records,
computerized physician order entry, clinical decision support systems,
and especially the Medicare shared savings program.

As opposed to well established integrated health systems like Kaiser
Permanente, these new systems will be formed from the existing health
care community. The authors explain that there is no guidebook to
develop and implement a coherent system by combing the existing
professionals and institutions. Efforts will require considerable money
and time. New personnel such as care coordinators and information
technology staff will be required. As they state, "We have seen no model
of a 'flat' accountable care organization — one requiring no increase in
numbers or layers of staffing." And it will be difficult "to ensure that
all changes are internally congruent."

Although most agree that there is a need for reinforcement of our
primary care infrastructure, the authors provide evidence that the
demands of care coordination under ACOs will cause a reduction in time
spent on direct patient care. One study indicated that care coordination
would require an additional 3.2 weeks per year of physician time.

The successful Kaiser and Group Health models took many decades to
develop. You cannot suddenly take the existing fragmented delivery
system and create competing, truly integrated systems in each community.
That is what was wrong with Enthoven's managed competition model, and
that is what is wrong with the incipient accountable care organization

The greatest risk of ACOs seems to be that Medicare will use them to
help meet the political goal of "reducing entitlement spending,"
sacrificing the emphasis on quality because of cost considerations, and
applying pressure to ratchet down spending. The latter is particularly a
problem because private health systems are not very adept at identifying
and ferreting out waste, rather they reduce spending primarily by
impairing access. Selectively limiting Medicare spending will further
compound access problems by a reduction in the numbers of willing
providers, likely diminishing public support of Medicare.

In contrast, a single payer system is designed to reduce the abundance
of identifiable waste, especially administrative, while improving both
quality and access. It would be fine to continue with a demonstration
project studying integration of health care to see if such delivery
system reform could improve quality, but we don't want to allow that to
displace the much needed financing and health system reforms of single
payer. That's where we would have the greatest return on quality, access
and costs.

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