Accountable Care: The Top Five Things the Community Hospital Can Do Now

Accountable care organizations are the government-prescribed remedy for overhauling healthcare. Aimed at maintaining or improving the quality of care while reducing overall health care costs, organizations that can effectively demonstrate they meet quality thresholds (e.g., clinical processes and outcomes, patients’ and caregivers’ perspectives on care, and utilization and cost targets) may be eligible to receive additional incentive payments from Centers for Medicare & Medicaid Services.


The legislation leaves nebulous the specific structure ACOs should take, as well as the specific quality thresholds ACOs need to meet. Regardless of final structure ― group practice arrangements, networks of individual practices, partnerships or joint-venture arrangements between hospitals and providers, or hospitals employing providers ― there are five things community hospitals can do today.

1. Align your high-quality physicians
In an ACO, physicians must be a fully functioning partner in the care process. As such, hospitals must better align their quality physicians to create lower-cost, higher-quality outcomes.

Action Steps:

  • Understand how aligned your physicians are on each of three areas: economic, clinical activity and engagement factors. Take the physician-hospital alignment diagnostic test at
  • Implement specific strategies from the physician-hospital alignment diagnostic to strengthen relationships. There are four categories of alignment: employment, business services, contracts and structured communications.

2. Focus beyond the hospital
Under a population management model, the hospital itself is no longer the center of the healthcare model. Instead, the community hospital must refocus on the community rather than the hospital.

Action Steps:

  • Change your culture from hospital to health system. Community hospitals need to make a dramatic change in their organizational culture from the inside-out thinking of “my care, my time, my location” to the outside-in thinking of “right care, right time, right location.” This change starts at the top.
  • Assess your continuum of care. Which components of the continuum of care from home to home do we own, which do we control and which are outside our sphere of influence? In the future, the community hospital or its partners will need to coordinate all elements of the continuum.
  • Organize your ambulatory services. Keeping patients out of the hospital will be a key goal of population management. As such, hospitals must develop robust ambulatory systems. By creating five distinct ambulatory models, community hospitals can organize the care delivery model outside the hospital.

3. Create information transparency
The flow of information is one of the largest barriers to transforming health care today. The success of any population management model depends on information transparency across multiple organizations.

Action Steps:

  • Build information technology infrastructure. Creating a common information system infrastructure across the care continuum starts with the hospital and physicians. Meaningful use incentive payments require the free flow of meaningful information.
  • Identify quality measurements specific to your institution. The definitions of appropriate quality measures are critical to demonstrating the quality components of the patient value equation. Community hospitals, by virtue of being closest to their specific communities, should determine the quality measures that are most important to their populations.

4. Think value, not volume
Move the organization’s direction from growing inpatient volumes to delivering the most effective care to increase the patient value equation:

Quality + Safety + Convenience + Service
Patient Value =   --------------------------------------------------------

Action Steps:

  • Develop a Patient Value Scorecard. Building from the specific quality metrics above, create a scorecard to actively monitor and advance each of the patient value elements.
  • Monitor cost, not margin. In an ACO world, cost will be an important success factor. Today most hospitals measure margin, but in the future, community hospitals will control only the cost component of the margin equation. Begin by shifting the monitoring now.

5. Create a shared community vision
Bringing providers together requires a common vision between the community and the providers of care.

Action Steps:

  • Change your organization’s “elevator speech.” The 30- to 60-second summary of your organization’s goals is critical to helping communicate a new vision for the community hospital.
  • Educate the board and staff. The implications of healthcare reform are dramatic. The community hospital board and staff must be quickly educated.
  • Consider how you will balance a shared governance model. The ACO requires a shared governance structure to manage coordination of payments. Developing the capabilities to operate in a shared governance model can begin with incorporating physicians into the governance of smaller units such as service lines or ancillary businesses.

Kate Lovrien and Luke Peterson are in the Health Care Strategy Practice at Kurt Salmon Associates; together they have more than 20 years of experience working with and advising the leaders of regional healthcare systems and community hospitals. They can be reached at and

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