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Healthcare IT loves acronyms. Keeping track of these acronyms can be challenging, particularly when there are replacements or additions to what has already being used.

Lucky for us, there’s a new acronym in health care causing quiet a dialogue: ACO.

What is an ACO?

ACO stands for, “accountable care organization,” which is a network of physicians and other health care providers that agree to share responsibility for the care of a group of individuals with the intent to preserve health and promote healthy living.

National Public Radio recently published an article, “Accountable Care Organizations, Explained,” that explained ACOs in light of health care reform discussions. The article quotes Harold Miller, president and CEO of the Network for Regional Healthcare Improvement and executive direct of the Center for Healthcare Quality & Payment Reform in Pittsburgh, who describes the ACO function as similar to manufacturing a television.

A TV manufacturer like Sony may contract with many suppliers to build sets. Like Sony does for TVs, Miller says, an ACO would bring together the different component parts of care for the patient – primary care, specialists, hospitals, home health care, etc. – and ensure that all of the "parts work well together."

 

The problem today, Miller says, is that patients are getting each part of their health care separately. "People want to buy individual circuit boards, not a whole TV,” he says. “If we can show them that the TV works better, maybe they'll buy it," rather than assembling a patchwork of services themselves. "But ACOs will need to prove that the overall health care product they’re creating does work better and costs less in order to encourage patients and payers to buy it."

It is important to mention that ACO objectives are not solely fueled by wellness. There is a payment and financial benefit to these organizations. Currently, the United States health care system is based upon a “fee-for-service” system that charges patients and insurance companies based upon each health care procedure completed or medication used. The traditional fee-for-service system is considered as being unsustainable, which is why many health care leaders are embracing the ACO model of service.

 

In the ACO model instead, the designated group of physicians are responsible for the quality, cost and overall care of a community. In a Quora post on the topic, Charles DeShazer, MD offered three essential ACO characteristics:

  1. Ability to manage costs and quality for patients across the continuum of care and across different institutional settings
  2. Capability to prospectively plan budgets and resource needs and distribute payments
  3. Sufficient size to support comprehensive valid and reliable performance measurement

The ACO model would allow physicians and health system leaders to plan and budget health care expenses for the community, ultimately lowering overall costs as well as redundant testing. This model for care is also particularly favorable for communities who rely heavily upon Medicare and Medicaid to fund health care.

Are there any concerns regarding the ACO model?

There are mixed opinions on what ACOs will offer our current health system. To some, ACOs represent “managed care,” a term and concept that induces anxiety and apprehension for some. From this perspective, ACOs remove the individual responsibility of managing one’s health and assign that to the group of physicians, whom may or may not have the patients’ best interest in mind (even if they should) when making decisions.

From a business perspective, ACOs could cause some disruption to the economy as well. For third party diagnostic and testing facilities not an integral part of the ACO system, such as radiology, laboratory and specialist facilities, businesses could be severely impacted by the shift from a fee-for-service system to community health care.

In small communities, in particular, where only one ACO is present, competition between third party diagnostic and testing facilities could be eliminated and the ACO would then be responsible for delegating the business. Depending on the relationship dynamics of the ACO organization and the third party facilities, the possibility and opportunity for conflict is apparent.

What opportunity is there with ACOs?

In an article titled, “ACOs and Community Hubs of Wellness & Health,” health IT thought leader Kent Bottles discusses a differing perspective supporting the ACO initiative. In his article, Kent describes ACOs as being community centers to promote healthy living and envisions these facilities to sit at the center of communities and provide additional amenities similar to current community park districts.

There are a number of initiatives transforming health care currently that fit well into the community health model. Kent suggests the transformation has already begun. “Becoming a CHWH will require hospitals to expand their services and expertise well beyond the traditional role of an acute care facility. It will also require hospitals to embrace social media and disruptive digital tools that are now available to help care for a defined population living in the community.”

It is no surprise social media has transformed health care over the last few years. The success of ACOs will depend on how effectively the organization communicates its objectives with the community. Social media provides a proven one-to-many communication and information sharing opportunity.

Are there any current examples of ACOs?

It can be agreed, however, that the ACO model would be a dramatic change from our current health system. Currently there are no examples of ACOs; however, the Center for Medicare and Medicaid Services (CMS) is currently exploring guidelines for facilities looking to adopt the ACO model. According to the CMS, plans under the program are expected to become available beginning in 2012, with performance evaluations beginning three years after the program’s implementation.

ACOs may or may not be the answer to our health care problems. In the coming years, it will be critical to provide feedback during open door forum sessions to the CMS on the ACO model in order to consider every possible result of the change and help form a solution that positively influences health our health as communities, but the economy as well.

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