Why ACOs will fail—but how delivery reform can succeed

Model built on 'untenable assumptions,' Harvard experts argue

Dan Diamond, Managing Editor

Hundreds of hospitals, doctors, and other providers continue to roll out accountable care organizations, hoping that the collaborative model will help cut health costs and improve care quality.

But Clayton Christensen, the famed Harvard Business School professor who coined the term "disruptive innovation," has a message for health care leaders that may be a bit, well, disruptive.

"The number of ACOs will continue to increase," Christensen and two co-authors write in Tuesday's Wall Street Journal.

"We believe that many of them will not succeed."

Christensen and co-authors: Three challenges facing ACO model

According to Christensen and his fellow authors—Jeffrey Flier, dean of the faculty of medicine at Harvard University and professor of medicine at Harvard Medical School, and Vineeta Vijayaraghavan, a senior research fellow at Innosight Institute—the ACO model is built on three untenable assumptions.

Authors: ACOs can't change physician behavior on their own
In order for ACOs to achieve their goals of improving care and cost, "most doctors will need to change some of their approaches to treating patients," the authors write, such as further relying on evidence-based protocols or moving more care away from hospitals and to lower-cost sites.

However, physician behavior has been molded by years of interaction with fellow doctors, hospitals, and insurers, and ACOs are not currently "designed or equipped to transform physician behaviors on the scale that will be needed," Christensen and his co-authors conclude.

Authors: ACOs won't change patient behavior on their own, either
As currently constructed, many ACOs let patients obtain care anywhere they choose—a deliberate break from the HMO model, which was widely adopted in the 1980s and 1990s, but became unpopular for relying on "gatekeepers" to restrict access to high-cost specialists. 

However, this freedom means that patients won't be steered toward the most cost-effective, high-quality providers, the authors write.

Authors: ACOs won't save money on a grand scale
Even if the nation's new ACOs successfully hit their cost and quality goals, their impact on cost control would be relatively miniscule; the Congressional Budget Office has estimated that the 32 Pioneer ACOs' savings would optimally total $1.1 billion over the next five years, a drop in the bucket of more than $2 trillion in Medicare spending over the same period. And other reforms, such as adding millons of newly insured patients to the system, are bound to simultaneously drive up the nation's health care bill.

"No dent in costs is possible until the structure of health care is fundamentally changed," the authors conclude.

Roades: Difficult transition ahead

Christensen and his co-authors get it “exactly right,” according to Chas Roades, the Advisory Board’s Chief Research Officer.

Namely: To successfully hit their goals of lowering cost and boosting quality, providers need to do much more than just shift incentives.

“This transition is hard,” Roades told the Daily Briefing, “and physicians won’t just change the way they deliver care overnight—transforming care delivery will require a shared approach in which hospitals and doctors work together to develop new approaches and care protocols."

Roades suggests that the real shift will be a move toward "a more distributed model of care delivery, with new roles and responsibilities for doctors, nurses, and other clinicians."

"And the hardest part of all will be engaging patients in the new model of care," Roades concludes, pointing to his recent essay on patient engagement in Health Affairs. "Without patient buy-in, the current model will be very hard to change."

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