ACO Adoption Curve Begins, But Most Hospitals Aren’t Ready for Financial Risk

The nation is slowly moving toward a managed healthcare model, specifically accountable care organizations (ACOs), says The Commonwealth Fund, where health care providers take responsibility for a defined patient population, coordinate their care across settings, and are held to benchmark levels of quality and cost, but few hospitals are ready to take on the risks and costs associated with managing the care of a population. 

“We’re really still at the very beginning of the adoption curve of the ACO model,” says Anne-Marie Audet, the lead author of a study about a Commonwealth survey of hospital readiness to participate in ACOs. “The challenge is that hospitals are still not ready to assume financial risk.”

ACO-minded hospitals were more likely to be larger, belong to a health system, be located in large urban areas, and be teaching and nonprofit organizations, the survey found, compared with those not planing on being part of an ACO. 

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Over all, three-quarters of those surveyed said they weren’t exploring the ACO model at all, with the remaining 25% almost evenly split between those who were unsure of what they would do, or those who were participating or preparing to participate. 

So far, there are 154 ACOs encompassing about 2.4 million Medicare beneficiaries, while other ACOs are involved in private health insurance partnerships. 

While nearly 85% of survey respondents that are either participating or preparing to participate in an ACO have information systems to track utilization, less than half (49.7%) said they think they have the financial strength to accept risk. Only about 20% reported having a system in place to use data predicting which patients were most likely to have poor health and require more services, which affects the ability to manage risk. 

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“ACOs will need to be clear and comprehensive when laying out their consolidation plans to justify how they will result in clinical improvement. Furthermore, they will need to supply data on the impact of these consolidation and clinical transformation efforts,” Audet concludes. “It is essential that we learn from the challenges of these early entrants to refine future policies and interventions that can persuade others to adopt the model.”

Read the full brief highlighting results of the 2011 National Survey of Hospital Readiness to Participate in an Accountable Care Organization. 

Written by Alyssa Gerace