Let’s say you are a full-time office worker (which you may be). Is your salary based on how many tasks you perform during the day? How many reports you file? How many people you call?
Cleveland Clinic is a non-profit academic medical center. Advertising on our site helps support our mission. We do not endorse non-Cleveland Clinic products or services. Policy
With some exceptions, the answer is probably no. Your salary is based on how well you do your job, including both effectiveness and efficiency.
Now apply that thinking to a healthcare organization. In large part, it’s the idea behind the accountable care organization (ACO), a concept that is taking off in the era of healthcare reform. At their most basic, ACOs are groups of doctors or hospitals that volunteer to deliver coordinated care within a new payment structure. The focus of an ACO is to keep quality up and costs down.
That idea sounds complicated, but there’s a simple idea at the heart of it: better care for patients.
ACOs get paid for outcomes, not services
As I mentioned in a previous post about value-based care, the fee-for-service model of healthcare may be disappearing. In the ACO model, patient outcomes are more important.
“There will be growing pains as ACOs learn to marry quality and cost. But patients could benefit tremendously from this new model in the long term.”
David Longworth, MD
Chairman, Medicine Institute
For the ACOs that focus on Medicare patients, for example, there will be 33 outcomes measures that determine payment. Instead of getting paid for each office visit or each test a doctor orders, payment will be based in part on the health of the patients those ACOs treat.
For example, if an ACO serves a population of diabetes patients, are those patients well controlled with regard to blood sugar, cholesterol and blood pressure? Will their cost of care be below certain targets? If so, an ACO will share in some of the cost savings.
In other words, ACOs offer real, practical incentives for doctors and other healthcare professionals to make you as healthy as possible.
Risks and rewards
Those 33 outcome measures I mentioned come with risks and rewards.
Medicare and the Affordable Care Act are setting benchmarks for both the cost of care and patient outcomes. If an ACO meets or exceeds those benchmarks, it shares in the savings Medicare or other payers receive. Put simply: The ACO receives more money when it exceeds expectations. It’s a recipe for innovation and improved quality.
The rewards are powerful incentives, but so are the risks. ACOs can enter the system at different levels of risk, but the basic idea is that if they don’t reach the benchmarks, they get reimbursed at a lower level. Organizations have to be smart to meet their benchmarks — and to make quality and cost go hand in hand.
It’s not just about Medicare
There is no doubt that the ACO movement is driven by Medicare and healthcare reform. There are well over 200 Medicare-related ACOs in existence today.
But there are also more than 400 ACOs total, because commercial ACOs are starting to see the value of this model. They range from small physicians groups to large hospital systems, but the common factors are coordinated care and a new payment model.
There will be growing pains as ACOs learn to marry quality and cost. But patients could benefit tremendously from this new model in the long term. After all, the incentives are based largely on making people — especially those suffering from chronic conditions — healthier.
That is, and always will be, the goal of healthcare. ACOs simply represent a new way to meet the goal.