ACOs' modest outcomes so far: Bitter disappointment or hopeful progress?

In response to some lackluster outcomes from accountable care organization activity, some commentators have suggested these experiments are not working as intended, and they are raising questions about whether the accountable care movement has already failed.

Navigant Center for Healthcare Research and Policy Analysis, August 31, 2015
"Nonetheless, three in four ACOs did not save Medicare money and will not be distributing shared savings to their participating providers. And, as earlier noted, 12 of the original 32 Pioneer ACOs dropped out of the program complaining the upside did not justify its risks. So what's this mean for the future of ACOs? Is the glass half full or half empty?"

Kaiser Health News, September 14, 2015
"A high-profile Medicare experiment pushing doctors and hospitals to join together to operate more efficiently has yet to save the government money, with nearly half of the groups costing more than the government estimated their patients would normally cost, federal records show... After paying bonuses to the strong performers, the ACO program resulted in a net loss of nearly $3 million to the Medicare trust fund, government records show."

Medscape, September 22, 2015
"One year after contracts began for the Medicare Pioneer ACO program, a study has found a modest reduction in use of low-value services... They found that after 1 year, compared with a non-ACO control group, the ACO group had a 4.5% differential reduction in spending on low-value services."

Towers Watson has a more optimistic perspective. We believe the Affordable Care Act is an influential tipping point for value transformation of healthcare, coming as it does after a long series of piecemeal efforts that date back to the HMO Act of 1973.

Despite continued healthcare price inflation and many attempts to move healthcare delivery systems' focus from pursuing volume to producing value, providers have not made many transformative changes — until recently. One could reasonably argue they were not incentivized to do so under fee-for-service reimbursement that rewards volume over value. Most did not accept until very recently that traditional FFS reimbursement was in imminent danger of ending soon. Now, the majority of providers do, thanks to the ACA and the momentum it has helped to create.

Arguably, what the ACA intended by defining the original Pioneer and Medicare Shared Savings Program ACOs was to provide specific new reimbursement models that CMS and its Center for Medicare & Medicaid Innovation could quickly use to fund and implement to accelerate the pace of health system transformation. In effect, these ACO models pointed the way to newer reimbursement mechanisms that will eventually replace FFS, substituting more appropriate value-based incentives rather than the perverse incentives for higher volume inherent in that older model.

Were these models meant to be the definitive design for all value-based care efforts into the future? Highly doubtful. More likely, they were simply a point of departure. In fact, successful variations of the ACO model have been developed, and commercial payers and state Medicaid programs have adapted them for their own ACO-like models. Together, ACA and CMS "lit the fuse" for more rapid transformation of health delivery systems to value-based care.

If this was the primary purpose of the ACO structures defined by ACA, then they have been quite successful in convincing providers that change is both imminent and inevitable, and in prompting providers to ramp up the pace of that change. Most likely, architects of the ACA's original ACOs will not be disappointed by this evolutionary process if the goals for accountable care are being achieved on a large scale by the ACOs of tomorrow.

Before deciding whether ACO efforts to date have been worthwhile and promising, or disappointing and uninspiring, consider the following:

- Inconsistent ACO results are not surprising — they should be expected.
Two decades of healthcare quality report cards demonstrate that quality of care is unevenly distributed; no health systems or group of providers are best at everything, and the variability of quality within systems is at least as great as that between systems.

Change is hard, and transformational change is harder still; practice habits ingrained from arduous training and years of practice are not easily modified without clinical leadership, culture change, infrastructure support, team-based delivery modes, incentives, performance data, etc.

Once underway, progress toward full transformation takes time, and there are inevitable dead-ends and some slippage along the way.

- Many ACOs will not succeed in achieving our highest hopes.
It would be reasonable to expect the customary bell curve distribution of ACO outcomes for the Triple Aim*; only in Lake Wobegon can all ACOs be above average.

Transformation to value-based care — with better health outcomes at lower per capita cost and improved patient experience — requires a complex series of interdependent changes, that is, a disproportionate number of completed actions before a sustainable value proposition is achieved. In other words, doing half of what's needed likely will achieve only 20-30 percent of the ultimate result; completing 70-80 percent of the transformation will likely be needed to get 50 percent.

- Success for any ACO means success is possible for more ACOs.
Assuming the data are accurate and credible, positive Triple Aim outcomes that are sustained over time for any health system are probably indicative of significant transformation, even if the average of all aspiring ACOs in aggregate is not discernible on measures of interest. Poor-performing ACOs will offset the better performing, but that does not invalidate what the better ACOs have achieved and what others that emulate them may be able to replicate.

- It's much too early to declare final defeat or victory.
ACOs are a work in progress, and accountable care should be thought of as a journey rather than a destination. In healthcare as in other pursuits, practice makes perfect — iterative refinement will contribute to improved performance over time, with increasing reliability and safety as well.

- Not all the media reports are dire as those cited above.

HealthLeaders Media, August 31, 2015
"Many of these ACOs are demonstrating that they can deliver a higher level of coordinated care that leads to healthier people and smarter spending," said CMS Acting Administrator Andy Slavitt, MBA, in a press release that accompanied the detailed report on ACO performance in 2014. Elliot Fisher, MD, MPH, director of the Dartmouth Institute for Health policy and Clinical Practice in Hanover, N.H., told MedPage Today that he was struck by the fact that the longer a hospital or physician group had been participating in the program, the more likely they were to achieve savings."

Given these considerations, it is quite encouraging to see the number of health systems undergoing transformation in different ways, at differing paces, working with various partners and advisors to guide their progress as ACOs. Over time, these efforts should generate information and understanding that will lead to more effective organizational structures and better outcomes for accountable care.

*The Triple Aim is a framework developed by the Institute for Healthcare Improvement that describes an approach to optimizing health system performance. It is IHI's belief that new designs must be developed to simultaneously pursue three dimensions -- the "Triple Aim": improving the patient experience of care (including quality and satisfaction); improving the health of populations; and reducing the per capita cost of healthcare.

Dr. Gordon Norman has held a variety of executive roles in the provider, hospital, health plan, and supplier sectors of health care focusing on quality and value improvement and brings significant population health, value-based care, and provider transformation expertise to the Health Management team at Towers Watson. He can be reached via email at

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

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