Predicting ACO Formation: Two Studies With More In Common Than It Might Seem

By Valerie Lewis, Carrie Colla, and Elliott Fisher
Health Affairs Blog, October 22, 2013

At a time when policy makers, providers and payers are all trying to make high stakes decisions about how respond to the proliferation of Accountable Care Organizations (ACOs), divergent research findings might feel as welcome as rain on the fourth of July.

Two recently published studies, one by our group at Dartmouth and one by David Auerbach and coauthors in Health Affairs, both examined predictors of ACO formation.  On the surface, they appear to have some inconsistent findings.  Their core conclusions, however, are similar, and differences in the results are readily explained.  Most importantly, policy implications are well aligned: there is much we can do to help the transition to accountable care succeed.

A common set of policy implications

The findings in both studies also point to challenges that deserve further attention by policy makers.  How can providers without experience in risk-based contracts or who are in smaller, more fragmented practices get the additional support they may need to become an ACO?  Models like the Medicare Advance Payment model are one move to support these types of providers, but our results here and elsewhere suggest that policymakers should be further developing programs to support the financing of these systems, along with the development of analytic and care coordination capabilities that are likely necessary for ACO success.

Another important question

How can spending and quality benchmarks be refined to encourage broader participation?  Some (including us) have suggested that paying for improvement rather than absolute performance on quality may encourage underperforming systems to join the ACO model. Careful thinking is necessary from health economists and health care finance experts on how to set cost targets that do not penalize providers already on the low end of the cost spectrum.

The imperative of continued learning

Perhaps the most important conclusion, however, is to acknowledge the many uncertainties that remain.  The transition to performance-based payment systems has barely begun – and better information on what is working and what isn’t would make successful reform more likely.…

If you are holding your breath to see if accountable care organizations (ACOs) are the answer to our quality and cost issues, I have some life-saving advice for you. Don’t wait, but breathe immediately!

Elliott Fisher from the Dartmouth Institute has been credited with coining the term, accountable care organization. Look at what he and his colleagues have to say: The most important conclusion is that many uncertainties remain.

One of the more important reasons for the uncertainties is that there remains a conflict between those who support better integration of health care (a noble goal) and those who support a business model that smacks of MBA-driven managed care (an ignoble goal).

There are no uncertainties with the single payer model. We should proceed immediately to the enactment of an improved Medicare for all, and then we can afford to take years to study variations of the ACO model to see if we can improve health care delivery.