Accountable Care Organization (ACO): The New Paradigm in Providing Healthcare

Though the buzz in the Healthcare Industry in the United States is around 'meaningful use' as a provision under the HITECH Act, most Healthcare providers are grappling with another situation – how to provide adequate care while keeping costs under check?

Often in my experience I have seen that Healthcare costs have been driven up by treatments and procedures that were not really necessary but were followed more out of process. This always led to increase in overheads and reduced margins for the providers. Accountable care is a system by which there is an increased emphasis on efficiency and mapping costs to results.

In 2009, the Medicare Payment Advisory Council recognized the Accountable Care Organization as a model to restructure Medicare Cost. In a recent report, non-IT executives recognized Accountable care as the top priority for their Healthcare system.

So how does the Accountable Care Organization (ACO) model work?

An Accountable Care Organization is actually a structure dedicated to quality and efficiency in medical practice, reporting and compensation standards across a group of physicians or a hospital for the patient community. The advantages of this system include an integrated healthcare environment across the provider backed by efficiency and transparency. The objective would be to measure healthcare organizations based on outcomes rather than the process. This would also ensure that the costs are controlled and money spent on activities that actually promote patient welfare.

With the coming in of the Patient Protection and Affordable Care Act (PPACA), there would be a move to create Health Insurance Exchanges. This would directly affect the costs of the providers as lesser number of the uninsured would be walking in to the Emergency Services (ER) of the providers. Most providers are not able to provision for this cost and hence the resulting overhead. As the costs linked to insurance can be calculated, it will help providers plan their budgets in a more efficient manner. The Patient Protection and Affordable Care Act also provides for implementation of the Medicare Shared Savings Program by January 1, 2012, with multi-year ACO agreements spanning three to five years.

In a 2008 article that was published in the Hindu Business Line, I had advocated the use of Physician Ratings by providers to ensure that there was a framework of operational efficiency inbuilt in the system.

Today two years later, the move to make Healthcare organizations more efficient is a reality.
Despite all the advantages, this move is not without challenges. Currently the creation of ACOs is voluntary and one has to agree to be in this program for at least three years to qualify as an ACO. There are still a lot of questions unanswered as to the qualifying criteria for an ACO, the interactions with state insurance regulations and the payment methodology, but still the thought of an Accountable Care Provider (ACO) is a step in the right direction.

About the Author

Dr.Vikram Venkateswaran

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