Their efforts paid off — between April 2012 and December 2013, the ACO reduced Medicare expenditures by more than $20 million among its covered population. Patients were also healthier, as seen by an 11.8 percentage-point increase in the number of diabetics with their condition under control to a 12.2 percentage-point increase in the number of people who received vaccinations.
Former National Coordinator for Health IT Farzad Mostashari, MD, who recently chronicled the efforts and successes of the Rio Grande Valley ACO in a New York Times op-ed, says these results show the potential of ACOs to reduce costs while improving care.
However, it’s important to note no hospitals took part in the Rio Grande Valley ACO, which doesn’t surprise Dr. Mostashari. “The biggest challenge for hospitals is navigating what I call the foot-in-two-canoes problem,” he says. Hospitals have to survive (and be profitable) in a volume-based world now while also preparing for the switch to value-based reimbursement. “It’s a real conundrum for hospital leadership, and limits their ability to get on board with shared savings [programs],” he says.
Therefore, hospitals today are mostly focusing initiatives that will be beneficial no matter which canoe they’re in, he says. “They’re hedging their bets, they’re doing things that will help them in both volume- and value-based scenarios,” says Dr. Mostashari. For example, many organizations are creating clinically integrated networks that will help capture more service lines, increasing volume, but will also prepare the system to coordinate care under an ACO or similar structure. Similarly, merger and acquisition activity will leave expanded systems with more negotiating power in fee-for-service contracts with payers today, but will also help consolidate and streamline population health initiatives in the future, he says.
What hospital executives need to do, says Dr. Mostashari, is put both feet in the value-based canoe, though he recognizes this to be no easy feat. As the CEO of Aledade, a company focused on getting primary care physicians into ACOs, Dr. Mostashari knows these practices have less overhead than hospitals and have an easier time jumping into a new reimbursement structure.
That doesn’t mean hospital executives don’t need to take the leap.
Dr. Mostashari recalls an old adage that says leaders thinking a year ahead are prophets, but those who think three years ahead are martyrs. “Hospitals need leadership that can take the hit today and not get fired for doing the right thing,” he says, lest they face the same fate for not preparing their hospital for the inevitable shift to value-based reimbursement.
He says hospital executives should take hope in the story of McAllen and know value-based reimbursement can be a win for all stakeholders. “For too long, there’s been a tradeoff in healthcare,” he says, where reimbursement policies rarely favor providers, patients and taxpayers. Now, with ACOs, they can. “Now there’s this window of opportunity where you can do what’s good for the patient, the provider’s making more money and it’s not driving up costs,” says Dr. Mostashari.
“That’s the space I want to live in,” he says. “I want to crank that window open wide.”
