In the face of recent economic pressures, healthcare providers have been urged to seek out more cost effective methods of providing care. The pressure to treat a greater number of individuals with fewer resources has forced many providers to consolidate in order to cut costs. Consolidation has enabled smaller groups of providers to take advantage of increased buying power and shared operational and administrative resources. Larger groups of providers, contained within broader systems, have opted to join forces with large employers to participate in narrow networks or provide preventative services in the hopes of mitigating more expensive critical care.
And while many of these actions have helped reduce the expenses associated with care provision, both the government and the general public continue to criticize these organizations for the cost of healthcare services. As a method of addressing these costs, healthcare systems have been urged to transform into Accountable Care Organizations (ACOs).
While we have heard the term ACO thrown around more and more recently, they are only a small subset of the massive new health legislation. An ACO, in simple terms, are groups of doctors, hospitals and other health care providers who come together voluntarily to give coordinated, high-quality care to their Medicare patients. But providers won’t stop talking about ACOs. Moreover, while the definition of an ACO is technically only based on the approach for Medicare patients, the organizational transformation required to serve Medicare patients would inadvertently change the approach for all other patients as well.
The benefits to becoming an ACO are not just financial. Considering the pressures surrounding these organizations to decrease costs, there may also be a perceptual benefit among institutions that lead the way, particularly among their peers.
But the single most important stakeholder – the patient – may not have the same opinion. Consumers, while eager to see the cost of healthcare reduced, tend to be forgotten in the conversation around whether to become an ACO. Yes, consumers want to save money, but the value of the ACO has not been made clear to patients. They’re rarely accounted for in the discussion, as the focus is mainly set on the financial benefit to the provider.
The reality is that these lower costs are seldom passed on to them, and in the face of universal coverage, will be even less accessible to them. Instead of cost concerns, consumers should be more interested in how an ACO may impact the care they receive or the access they are provided.
Universally, both providers and consumers agree that quality is important. But the importance of quality is not up for debate. The most important factor to consider is how each party defines ‘quality’ care. Providers define quality based on a set of metrics, usually linked to outcome data. Consumers, on the other hand, judge quality on the provider’s competence and compassion, inherently combining the experience with the outcome to define ‘quality’. This becomes an issue in how consumers may perceive ACOs. When care is provided by a party that also has financial stake, it may signal conflict of interest.
Part of becoming an ACO is better managing the provision of services for a patient across a variety of needs in order to deliver more cost effective care. For an organization to have the breadth of control and perspective that is needed to function as ACO, they need to be able to provide all healthcare services for each patient. This creates increased visibility but drastically reduces provider choice for consumers. Healthcare providers have traditionally considered themselves to be exempt from being seen as a consumer service in a capitalistic market, but consumers are slowly removing the exemption. They see their co-pay as their currency for a right to choose a provider, on credentials, recommendations or reviews. ACOs are meant to restrict this choice by providing consumers with more limited options, which may impact a consumer’s view of the ACO as a whole.
As providers consider the pros and cons of becoming an ACO, they should not only look at the financial impact of the decision but also what it says about them to consumers. Despite the fact that 700,000 Americans are forced into bankruptcy every year due to medical bills, they are willing to pay more in order to retain their right to choose a provider and not be treated as a financial liability.
Should providers choose the ACO route, transparent communication will be critical in assuring consumers that their best interests are also in mind.