Healthcare Reform Blog > June 2014 > Too big to succeed?

Too big to succeed?

AnnJeanette Colwell

Contributor: AnnJeanette Colwell
Topic: Accountable care organization, Medicare Shared Savings, Pioneer ACO, Clinical integration

A slew of accountable care agreements have been launched in recent years; it seemed like not a week went by without an ACO announcement. Recently, however, more and more of these ACO agreements are being abandoned. Many of these partnerships made headlines when they were launched, since they often aligned previous competitors, or aligned two smaller groups whose combined power made them larger than the dominant market player. But did these early adopters, and the subsequent fast followers, bite off more than they could chew?

Some of the accountable care partnerships that have been launched were predicted to be game changers because the ACOs would have significant negotiating clout with managed care organizations and could save millions of healthcare dollars by providing high quality, cost-effective care.  Yet now more and more of these ACO arrangements are not working out. 

For example, nine of the Pioneer ACOs left the program in summer 2013 after the first year. These organizations had been hailed as trailblazers that were leading the country into the world of accountable care, but apparently it was too much, too soon for some of these early adopters. Two ACOs left the program entirely, while seven shifted into the Medicare Shared Savings Program, which doesn’t require providers to share in losses like the Pioneer program does. 

A more recent example of this accountable care backtracking is in Indianapolis, where the Accountable Care Consortium is being dissolved less than two years after it began. The ACC was launched in October 2012 by St. Vincent Health and Community Health Network, two of the largest health systems in the market, and Suburban Health Organization, the largest physician group. The other two major health systems in Indianapolis—Franciscan St. Francis Health and IU Health—had launched ACOs, so St. Vincent and Community Health decided to team up for one to gain a competitive advantage.

The ACC, which involved commercially insured patients, included 32 hospitals and almost 1,700 physicians employed by the participating hospitals to form a contracting behemoth that was predicted to transform the market because of its size and network in central Indiana. The joint venture also planned to contract directly with employers—rather than insurers—for its narrow network product and agreed to be financially accountable for the health of the employers’ workforce.

Although it was announced with much fanfare and expectation for success, the ACC was relatively quiet after that. A president was named to lead the organization. A few contracts were signed with employers. Local healthcare insiders maintained that the ACC had the potential to turn the Indianapolis market on its ear and were excited about the possibilities. But this support got increasingly hesitant as months went by without any visible progress.

The ACC’s founding systems seemed to have all the elements needed to form a successful ACO and were ready to take Indianapolis by storm. But in reality, it proved to be much too daunting of an undertaking as the groups tried to balance their individual interests with the launch of the combined organization.

Even Cleveland Clinic, a system that was expected to be in the first wave of ACOs, has held back and to date has not yet launched a Medicare ACO, although it does have a commercial accountable care arrangement with Cigna. Cleveland Clinic seems to have the necessary pieces for a successful ACO already in place, such as clinical integration and a physician employment model that focuses on efficiency rather than volume. The ACO model promised to give high-performing healthcare entities financial incentives for providing quality, integrated care, so it seemed like likely that Cleveland Clinic would take advantage of those incentives. Yet when the Pioneer ACOs and the first few rounds of Medicare Shared Savings Program ACOs were announced, Cleveland Clinic was absent from the list.

At a meeting of the Nashville Healthcare Council in February, Cleveland Clinic CEO Toby Cosgrove, M.D., explained that his health system had been slow to jump on the ACO bandwagon because of the uncertainty of the model. Cosgrove wanted the system to learn from the mistakes of the early adopters and hinted that Cleveland Clinic providers may “dip their toes into the ACO water in 2015.” Another factor that could be giving the health system pause is that Medicare ACOs, which are designed to control fee-for-service spending, may not be an ideal model for Cleveland Clinic physicians, who are salaried and not directly impacted financially by the FFS reimbursement system. Even so, the hesitancy of one of the most clinically integrated systems in the country to launch a Medicare ACO is a telling sign. And while it raised a few eyebrows when the system was absent from those first few rounds of federal ACOs, should it have actually been a red flag?

These examples could foreshadow what may unfold on a widespread scale as more and more providers begin implementing their ACOs. Sure, they were announced with much publicity and fanfare, but actually implementing these large collaborations might not be feasible, especially if the participating entities were already integrated and successful as separate organizations. Only time will tell if more of these game changer ACOs—like the one in Indianapolis—are actually just too big to succeed. 


Follow AnnJeanette Colwell on Twitter @AJColwellLHLI



Posted on: 6/25/2014 9:15:27 AM | with 0 comments


Tags: “Accountable, “Clinical, “Medicare, “Pioneer, ACO, ACO”, care, integration”, organization”, Savings”, Shared

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