Early Returns: ACOs Improve Management of Patient Populations, Offer Short-Term Savings

Several years ago, Presbyterian Medical Group in Albuquerque, N.M., decided to integrate three elements of its healthcare system: its health plan, the employed medical group, and the hospital delivery system. Knitting those parts into a cohesive whole helped the group realize that “lowering the cost of care by improving efficiency, by improving coordination, and by enhancing collaboration between payor and physicians made a lot of sense,” executive medical director David Arredondo, MD, says.

When the accountable care organization (ACO) concept came along, Dr. Arredondo says, “it really was just a natural extension of what we were doing.”

risk rewardThe ACO model, championed as a way to prevent the fragmentation of care and rein in costs by getting providers to assume joint responsibility for specific patient populations, received a major boost through 2010’s Affordable Care Act. Last year’s ACO rule-making process by the Centers for Medicare & Medicaid Services (CMS), however, was anything but smooth. Cautious optimism by such organizations as SHM gave way to loud complaints over the initial rules for a voluntary initiative called the Shared Savings Program. Critics asserted that participants would be forced to assume too much financial risk while being swamped with paperwork requirements.

By year’s end, though, the final rules had assuaged many of the biggest concerns, and the April 10 announcement of 27 participants for the program’s first round—more than half of which are physician-led organizations—has rekindled much of the enthusiasm. According to CMS officials, the agency is reviewing more than 150 applications for the program’s next round, which will begin in July.

Keys to Success

In December, CMS selected 32 organizations to participate in an even more ambitious initiative called the Pioneer ACO Model. That separate but related experiment in shared accountability launched Jan. 1, and it may be months before enrolled organizations can say whether the rewards outweigh the risks. Interviews with Presbyterian’s Dr. Arredondo and two other Pioneer participants about why they took the plunge, however, have highlighted some potential keys to success.

It was actually kind of a relief that the system was going this way because we, probably like many systems, were beginning to be caught between the budgeted model and a fee-for-service model.

—David Arredondo, MD, executive medical director, Presbyterian Medical Group, Albuquerque, N.M.

All three agree that the ACO model offers a better match for their long-term, patient-centered goals and that the fee-for-service model is gradually becoming a thing of the past.

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