Late yesterday afternoon, CMS announced that it will be extending the application deadline on its Pioneer ACO Model—its program for expected early ACO adopters already well on the way to accountable care—to August, the latest turn in this spring's ACO drama. Reaction to the ACO regulations, second only to the ongoing Medicare debates as the biggest health care stories of 2011, has been a rollercoaster. Back in April, I compiled an assortment of initial, immediate reaction to the regulations, which, while mixed, tilted toward the positive.
Then, as number-crunchers and other interested parties took a close look at the how the requirements would impact their institutions, hospitals and other providers began worrying about whether they would get any value out of participating in the first go-round starting Jan. 1, 2012. The American Hospital Association estimated the price of participation for the average freestanding hospital at roughly $5.3 million in start-up costs and $6.3 million in annual costs; another survey, by the Health Management Academy, reported that only 28 percent of hospitals and health systems surveyed were likely to participate after taking a look at the regulations.
There is still optimism to be found—in my podcast with the Health Management Academy's Paul Clark, he thought that, despite industry skepticism, a handful of regulatory tweaks could bring some life to ACOs and make them viable in the eyes of hospitals and other providers.
In response to that podcast, I got the following letter from Robert Tennant, a managing associate with Health Directions, that I think captures where most health care organizations are headed with their ACO strategy—the formal program may or may not work right now for many hospitals and systems, but the underlying principles are imperative for survival going forward. It's a sentiment I've heard in other conversations recently with health care executives, but Tennant sums it up aptly:
"I'd like to offer another point of view. Certainly, for most health care organizations, transitioning to an ACO will create short-term expense and disruption. At Health Directions, we are finding that health care organizations are not dismissing ACOs outright, but they are first asking: What do we stand to gain? In some cases the answer may be either not clear or not favorable. Regardless, there is a potential upside if the focus remains on increasing quality and efficiency of care delivery. As we weigh the future of ACOs, let's not throw the baby out with the bathwater. The point of discussion needs to shift from whether or not to become a formally organized ACO down the road toward a more focused evaluation of which ACO-type elements are worth adopting now. A commitment to achieving meaningful use with an EHR is a step in that direction, as is participating in a quality-driven pay for performance program. Both have short-term, well-defined financial rewards attached to them and both will likely increase quality of care. The key is for health care organizations to remain focused on the underlying thought behind ACOs—improving care and reducing costs. And that really is worth getting excited about."
E-mail your thoughts on accountable care, as part of an ACO or not, to email@example.com.