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Why ACO Quality Has Improved – And Why Financial Performance Lags

Why ACO Quality Has Improved – And Why Financial Performance Lags

By Ron Ritchey, M.D., Chief Medical Officer

The recent CMS report on the quality and financial savings achieved by Shared Savings and Pioneer ACOs was both unsurprising and instructive for all stakeholders. According to the report released last week (which include performance for about 250 organizations), ACOs launched in 2012 reduced spending by $817 million to date, with hospitals and doctors keeping about $445 million as a result. However, performance on quality improved for 28 of the 33 measures. These numbers are instructive for all stakeholders involved.

The original goal of ACOs was to help fix an inefficient system that was rewarding more care, not better care. From the very start of their inception, a consistent pattern was established. Specific quality measures were initiated within each ACO, focusing on prevention and careful management of patients with chronic diseases.  Such outcomes were more easily identified and reportable. Providers knew they would get paid more for keeping their patients healthy and out of the hospital, which was a clear target. They saw it, so they could hit it – and that’s why we saw improvements in quality. 


However, the better the organization is, the harder it is to show savings. It can be done with good, sophisticated IT systems that can quickly identify the sick patients in need of the most care. But if you’re a capable system that consistently performs well, you’re already efficient and it’s harder to show any incremental improvement, and further lower costs. Consequently, if you’re a middle-of-the-road organization, and you improve over the course of one year to a very efficient level, then where do you go from there?

Financial savings overall has proved a little harder to come by. This is due in major part to the spotty quality of Medicare data. They don’t link to clear, identifiable patterns, and there are problems with accuracy. Medicare is now under fire to do better from all sides, and I believe that data will become more complete, more accurate, and more consistent.

Some ACOs have just resigned themselves to not hitting their cost incentives.  Medicare wants to move everyone, but soon that incentive to make money may disappear.  If Medicare doesn’t liberalize, the market will shrink. Some alternative solutions may cost money short-term, but could also improve the consistency and sustainability of ACOs, which over time can help them achieve their stated goals.

I continue to maintain that care coordination and shared services remain the best way to achieve the twin goal of quality and financial savings, and I see it working in the communities we serve in our four states.

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