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Providers pursue non-ACO alternatives for accountable care

Modern Healthcare: 60% of health systems are not in an ACO

Topics: Accountable Care, Market Trends, Strategy, ACO, Health Policy

June 25, 2013

About 60% of U.S. health systems are not participating in an ACO—but a growing number are adopting alternative accountable care models, according to a Modern Healthcare survey of 150 health systems.

Why many hospitals are not participating in ACOs

According to the survey responses, hospitals are shying away from ACOs primarily because of the financial risk and capital investments associated with the model.

For many organizations, size also has been a factor in whether to launch an ACO. Small-market hospitals could face huge losses if even just a few patients seek care for chronic conditions outside the ACO network, according to LifePoint's Jess Judy.

In addition, Mark McClellan—former CMS administrator and head of the Brookings Institutions' Engelberg Center for Health Care Reform—notes that organizations are struggling with the cultural change required for ACOs.

Hospitals pursue alternative models

Although many hospitals are wary of the ACO structure, they still are looking for ways to make their care more accountable and efficient through various payment models, hiring strategies, and more.  

For example, Intermountain Healthcare—which has said it will not participate in the Medicare ACO program—launched a shared-accountability pilot this spring with 300 doctors. The pilot will test a new physician reimbursement model that bases up to 25% of physician payments on quality and cost targets. The model requires patients to engage in decision-making using appropriate insurance designs.

At Charleston Area Medical Center (CAMC) Health System, officials have decided that the organization could not withstand the financial risk of an ACO. However, it has invested in information technology, health care delivery reform, and new payment models. "We're doing what I call plug and play," said CAMC President and CEO David Ramsey.

Meanwhile, some organizations that are not participating in the Medicare ACO program say they are entering into shared-savings contracts with private insurers. For example, Sanford Health has said it will not participate in a Medicare ACO, but it has negotiated accountable care contracts in the private market (Evans, Modern Healthcare, 6/22 [subscription required]).

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