Hottest letters in healthcare are?

June 27, 2013 in Medical Technology

The hottest letters in healthcare right now are A, C and O. And while together they stand for accountable care organization, industry analysts say providers need to look beyond the acronym in their efforts to build a new business model.

Nick Sears, MD, chief medical officer for Atlanta-based MedAssets, understands that there is some confusion and trepidation among provider groups about how to start an ACO. As a veteran observer of industry trends over the past quarter-century, Sears realizes the magnitude of change that is being required of healthcare providers and the daunting task associated with making the necessary modifications.

“At this point, providers shouldn’t worry about what an ACO looks like, but instead focus on the building blocks that go into it,” Sears said. “Although it is part of the Affordable Care Act, which is currently under scrutiny in Congress, the intent of ACOs will continue even if parts of the ACA are stricken. So providers have to identify their risks in the whole value-based purchasing model because if they don’t they are in trouble.”

[See also: Bon Secours, Aetna ink big ACO deal.]

As the new healthcare model has emerged over the past couple of years, Jeremy Belinski, director of operations at MedAssets, has taken to call ACOs by another acronym – CIO, for clinically integrated organization. The description seems more apt for the machinations of putting groups together, he says.

“As we’ve dug into the process, we’ve found it is easy to form a legal entity, yet each group has its own model for doing things,” Belinski said. “But just because they’ve joined together doesn’t mean they can make it work. Making it operational has been a challenge. They have to get good at managing costs and aligning physicians, which is easier when you’re part of an organization. The challenge is to extend beyond the four walls of the hospital.”

Managing metrics

Ken Perez, director of healthcare policy for Emeryville, Calif.-based MedeAnalytics, has been studying the metrics associated with ACO configuration in both the Medicare and commercial insurance domains, developing a comprehensive report and a series of informative videos on the subject. His research found that ACO metrics can be divided into six categories: pediatric, ambulatory, prevention, acute care, outcomes, and utilization of services.

“As more ACOs become multi-payer, it is increasingly important to understand — for the sake of leverage and organizational alignment — the general themes and commonly used metrics used in ACO agreements,” Perez said. “This strategic understanding will help shape emerging best practices for successful ACOs.”

In discerning between commercial and Medicare ACOs, Perez found that commercial organizations place greater emphasis on areas of integration, pronounced cost reduction and resource utilization while Medicare ACOs are focused more on quality outcomes.

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