The Future of ACOs

Opportunity or failure?

Experts disagree on what a sustainable ACO may look like in the future. The shared savings model currently dominates, but David Muhlestein, an analyst with Salt Lake City-based health care consulting firm Leavitt Partners, said his company’s interviews with participants suggest that very few see the approach as the best long-term answer. Some believe the capitated models of the 1990s, the much-despised HMOs with their narrowly defined networks and global payments to provider groups, could return in a slightly altered form. Others feel strongly that a bundled payment model, which provides more flexibility on where patients go for care, will predominate. A few providers have even suggested that the shared savings experiment will eventually revert back to a fee-for-service approach.

Regardless of future expectations, Muhlestein said his firm has spoken with many organizations that are carefully monitoring how the current ACOs fare. “Right now, the ACOs that have formed are people who want to forge their own trail,” he said. “There are many more providers that want to follow some path, and they want to follow a path that has some evidence that it has been successful.” The more paths that are taken, he said, the greater the likelihood that one or more will achieve success.

Michael Coppola, MD, associate clinical professor of medicine at Tufts University School of Medicine in Boston and chief medical officer at NovaSom, Inc., sees plenty of financial opportunities in the near term. “There’s so much waste in the system that anybody in any field who can figure out how to squeeze the waste out is going to profit,” he said. “Eventually, most of that will get squeezed out, and then I think we’re going to be looking at global capitation: groups of … otolaryngologists will get a fee for managing all of the ENT patients in a population of, say, 200,000.” Under such a scenario, a provider group might receive a per-member, per-month fee and then determine on its own how best to spend the money.

Although health care analysts often talk about success in terms of controlling costs, Muhlestein said quality improvement and better outcomes alone could still prove alluring to provider groups considering an ACO model.

“Even if we don’t see a moderation in cost growth, but we do see an improvement in quality, there is the chance that the model could still stick around, because that’s enough,” he said. “Even if we’re paying the same amount, we’re getting better results, so our value has improved.”