To thrive in the increasingly disruptive healthcare environment of the future, accountable care organizations (ACOs) will need to develop a strategy that is data driven and consumer focused. It is becoming clear that, to enjoy long-term financial success, ACOs must position themselves to assume greater risk/reward models. Preparing to implement downside-risk models calls for organizations to develop a robust data-sharing infrastructure, move toward data-driven decision-making, and relentlessly strive to improve customer experiences. By understanding recent Centers for Medicare & Medicaid Services (CMS) statements about ACOs, examining the future impact of Amazon’s recent entry into healthcare, and deriving best practices, an organization can ensure it is optimizing all available resources to prepare for the future ACO new world order.
Understanding Recent CMS Statements
From 2012 to 2018, the Medicare Shared Savings Program (MSSP) grew from 27 ACO participants to 561. However, during that time, ACO net savings fell short of Congressional Budget Office (CBO) projections. The CBO originally estimated that the MSSP would save the federal government $1.7 billion from 2013 to 2016. Despite these projections, during that time, the MSSP increased federal spending by $384 million (a loss of $2 billion). The results understandably cast some doubt on the efficacy of ACO programs going into the future. However, despite this outcome, the downside-risk models in MSSP (Tracks 2 and 3) experienced positive financial results, indicating the potential for greater savings over time if ACOs adopt downside-risk models.
Despite some uncertainty regarding the long-term prognosis of ACOs, it is clear they are not going away. New administrator for the CMS Seema Verma recently indicated that she has committed to “using every tool at my disposal to move our healthcare system toward value-based care.” In March 2018, Secretary of Health and Human Services (HHS) Alex Azar acknowledged that “results for the early stages of federal efforts to encourage accountable care organizations have been, to be honest, underwhelming,” but he affirmed that “there is no turning back to an unsustainable system that pays for procedures rather than value. In fact, the only option is to charge forward—for HHS to take bolder action, and for providers and payers to join with us. This administration and this President are not interested in incremental steps. We are unafraid of disrupting existing arrangements simply because they’re backed by powerful special interests.” With CMS and HHS leaders reiterating that value-based care is the future of healthcare, one should assume commercial payers will follow suit as well. Furthermore, these comments imply shakeups to the status quo. If an organization has been coasting in an upside-only ACO model and is resistant to making the necessary changes to prepare for a more dynamic and risky environment, these statements should serve as a wake-up call that ACOs will remain a permanent but fluid fixture of the healthcare industry.
Learning Best Practices from Disruptors
With downside-risk models now the blueprint for future success, ACOs will endeavor to constantly monitor and reevaluate, in as close to real time as possible, which levers should be pulled to meet key performance metrics in the healthcare space. Enter a company like Amazon. With a hyper focus on continuously perfecting data collection and data sharing to make better decisions, as well as an unremitting pursuit of improving customer experience, disruptors like Amazon will aim to provide alternatives to the complicated, vague, and costly healthcare experience and make crystal clear that maintaining the status quo is simply not an option. Amazon possesses the mind-set and infrastructure that many health organizations lack to assume the greater risk necessary to succeed in a value-based care model like an ACO. As customers are now assuming a bigger portion of healthcare costs and consequently becoming more active in healthcare decisions, ACOs should learn from a company like Amazon, which is well positioned to provide a better customer experience than traditional healthcare providers. Imagine a shift from the first point of contact with a customer being in the doctor’s office to being in their living room through Alexa. This is the sort of improvement in customer experience that would enhance communication and patient compliance for an ACO.
Another great example of outsiders disrupting the status quo happened last August when a group of leading tech companies came together to tackle one of healthcare’s biggest challenges: patients’ difficulties in sharing medical information between doctors and hospitals. In a joint statement, Alphabet, Amazon, IBM, Microsoft, and Salesforce recently remarked, “We are jointly committed to removing barriers for the adoption of technologies for healthcare interoperability, particularly those that are enabled through the cloud and AI. We have the common quest to unlock the potential in healthcare data, to deliver better outcomes at lower costs.” While this task may be a difficult undertaking, ACOs would benefit from studying, understanding, and replicating these disruptors’ approaches to solving data-sharing challenges.
Many of these organizations lack the infrastructure or safety net of an Amazon or a Microsoft, which might explain their apathy toward adopting a downside-risk model. But ACOs, to reach their full potential, will need to take on greater risk by implementing a long-term strategy of adopting innovations similar to companies like Amazon. While initial results could be underwhelming, evidence suggests that an ACO’s performance may improve as it gains years of experience. Realizing consistent savings and maximizing financial reward will become possible by focusing on improving customers’ experience and investing in and maximizing technology to facilitate data sharing for the long term. Doing so will enable ACOs to assume greater financial risk, improve quality outcomes, reduce costs, and enjoy greater financial benefits.
Published October 10, 2018