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How to overcome 3 barriers to ACO development

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Although required under the health reform law, the formation of accountable care organizations still poses challenges to the hospitals and other providers who choose to go with the alternative payment model.

The Robert Wood Johnson Medical Group explained in this month's Health Affairs how it formed a patient-centered medical home model in its outpatient primary care offices, hoping to share its lessons with other academic medical centers interested in ACO development.

Authors Alfred F. Tallia and Jenna Howard from the Robert Wood Johnson Medical School in New Brunswick, N.J., noted there were some significant financial, cultural and regulatory hurdles when it started planning in 2009, well before the Centers for Medicare & Medicaid Services issued final guidance.

Secure finances
During the first phase of business planning, the ACO combined spreadsheets and narratives, which served as a blueprint and timetable for tasks. One of the biggest challenges was securing funding. Tallia and Howard wrote, "We found that securing one committed funder for capitalization created a domino effect. For example, the financial interest of one foundation brought three other potential funders to the table."

Overcome cultural resistance
As expected, the ACO encountered some initial reluctance from those who benefited from the existing payment streams, including subspecialty faculty, large self-insured purchasers and the profitable, independent university hospital. However, leadership's support from the dean, the medical group president and the university president helped secure planning and development.

"Overcoming this resistance to change has required us to repeatedly articulate a vision of advanced healthcare where all of the members of the academic health center thrive. We have done so at every opportunity, including at faculty and staff meetings, fundraising events, public seminars and speaking engagements, and annual meetings of provider groups and in press reports."

Comply with regulation
As other experts have noted, collaborating while ensuring free competition poses a challenge for ACOs. Robert Wood Johnson Medical Group said initially, it faced difficulty finding experienced legal counsel with ACO knowledge. Even though the ACO was unlikely to penetrate the market substantially, consulting counsel was worried about antitrust issues. CMS' final rule, however, offered guidance and safe harbors for ACOs.

For more information:
- see the research announcement
- check out the Health Affairs study abstract

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