Defining a Successful and Sustainable ACO

Warren Brennan, CEO, SMA Informatics
October 6, 2010

Healthcare reform has set in motion the concept of developing regional medical care units know as Accountable Care Organizations (ACOs). As providers and payers examine the law, their focus will be on defining what management needs and clinical analytic systems will be required for an ACO to be not only functional, but successful. Once these hurdles are jumped and demonstration grants end, management will then begin building a foundation for sustainability.

The movement to ACOs assumes:

medical care reimbursement for medical services will pivot from payments based on fee-for-service (FFS) to an increased emphasis on a complex, value-based system where patient outcomes have a direct bearing on cost;
payers and employer coalitions will demand new value-based payment methodologies; and
the drive toward integration will speed up - both formal clinical integration as defined by the FTC and DOJ, and various forms of informal plus contractual alignment between all types of providers. (Click here for a collection of links to documents related to formal clinical integration.)

The movement to ACOs also assumes that a nationally recognized, standard definition of the phrase will be developed and adopted by the healthcare industry. The current consensus seems to be that an ACO is a regional or highly focused entity and related set of providers that can be held accountable for the cost and quality of care delivered to a defined set of beneficiaries. This definition is of course subject to revision when the CMS publishes the first ACO demonstration regulations later this year.

No matter the definition, any form of ACO needs to able of operating at a level of internal trust with management information systems in place to reward clinical integration and care coordination among multiple providers.

The definition of what array of medical provider elements are required within an ACO remains to be determined, but in any circumstance the following will be necessary:

adequate array of primary care plus ancillary personnel to serve a defined population;
clinical arrangements for medical specialty management;
new forms of care process management;
communication tools to facilitate integration of practice teams;
patient satisfaction monitoring;
provider performance scoring against definitive clinical guidelines and incentive systems for superior performance;
real-time information systems capable of monitoring operating costs and income; and an
understanding of information systems used to manage risk.

Management systems, likely to be the bedrock of ACO operations, will include:

systems to gauge health status and the cost of serving populations;
system-wide measures and performance tracking of quality and efficiency;
episode-based resource-use metrics linked to quality metrics;
public reporting on outcomes/costs;
patient registries and/or EHR systems used by the majority of the providers;
practice guidelines/clinical protocols embedded in the EHR;
registries for identification and ongoing management of chronic-disease patients;
e-prescribing used by PCPs;
formularies for generics; and
electronic patient communication and structured patient education systems for after-care.

Warren Brennan is founder and CEO of SMA Informatics, a leading force in development of data-based strategic planning and marketing for healthcare organizations.

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