6 pitfalls of ACO adoption

In the past few years, accountable care organizations (ACOs) have seen numerous successes, with the Medicare Pioneer ACO program saving enough to qualify for an expansion. However, hospitals exploring ACO models must consider several potential obstacles, according to a new report.

The report, prepared by Leavitt Partners, the American Hospital Association and the Robert Wood Johnson Foundation, identified six challenges that often confront hospitals that seek to form ACOs:

Leadership: ACOs, like other value-based initiatives, by nature give physicians more of a seat at the table. As physician leadership increases, administrative staff must find a happy medium that provides guidance while giving doctors their autonomy.

Cultural shifts: One of the major transitions hospitals make when forming ACOs is consistent commitment to quality improvement, according to the report. Aligning goals and incentives at all levels, rather than pitting departments against one another, can also be a major challenge during this stage.

Clinical integration: A strategic shift toward population health management adds "an extra layer of sophistication" to ACO participation, according to the report. This means it's more important than ever for C-suite executives to communicate a clear vision to the organization. 

Shared-savings distribution: Currently, risk-sharing is the hospital's responsibility, leaving hospital leaders to distribute shared savings. To achieve consistent quality improvement, executives must engage and offer incentives to individual providers.

Physician alignment: Primary care physicians are in higher demand thanks to attribution models that emphasize primary care, with hospitals in some markets acquiring physician practices while others focus on the cheaper option of establishing partnerships with physician groups that self-manage.

Payer participation: One risk of the ACO model is payers reaping the benefits of value-based contracts they do not participate in, or the "spillover effect," according to the report. This keeps the model from actively rewarding improvements. To prevent this, the report recommends moving as much business into value-based contracts as possible.

To learn more:
- here's the report (.pdf)