Hospital Board discusses ACO

EARH will soon be considering an important choice. That choice is whether or not to join an Accountable Care Organization (ACO). It would be a major step.

The Centers for Medicare and Medicaid Services (CMS) wants to reduce spending on those services. One tool CMS has developed is ACOs.

An ACO is an association of healthcare providers, from individual physician practices to the largest multi-facility networks, banded together to try to decrease Medicare expenditures without reducing the quality of care delivered to patients.

They attempt do so by developing innovative approaches to the methods of delivering care.

If an ACO shows combined Medicare savings compared to its members’ expenditures, the ACO members get back 50 percent of those saved costs. The bonus is distributed among the ACO members in proportion to the patient count they represent of the ACO total.

Curiously, the members of an ACO need not have anything in common, not even geography.

Small Public Hospital Districts in Washington state can join, and some have joined, with huge medical networks in the southeast. That is, in a sense, “gaming the system”, because medical care in the southeast has notoriously been inefficient and expensive in modern times, so relatively large savings there are fairly easy to achieve.

By joining an ACO heavily weighted with southeast organizations, a small provider elsewhere can participate in the bonus program without making large improvements at its own facility. And there are currently no penalties if costs somehow increase instead of going down.

Joining an ACO might seem like a no-brainer, but it isn’t that simple. Just to keep the data CMS needs to evaluate an ACO members’ progress would require, especially for smaller institutions like ours, a substantial investment in both products, such as enhanced software systems, and human resources, as support staff would need to expand.

And that doesn’t even touch on the added costs likely to be involved in providing the better services required. In time, those should pay for themselves, but in the short to middle term, they’re yet another expense. Achieving just break-even is not a sure thing, though other Districts similar to ours report substantial success.

But CMS famously operates on a carrot-and-stick basis. The current ACO structure is purely optional, and the benefits potentially available are the carrot. Most observers of the healthcare world believe that in fairly short order now, CMS will introduce some big sticks, meaning penalties of some severity for not belonging to an ACO. If that occurs, then it behooves a healthcare institution to start now, rather than in the anticipated crush a year or so on.

The District has been offered a chance to join an ACO for 2019. To do so, the deadline is mid-year 2018; but if we sign up before the end of March, we receive a modest saving and, probably more important, have more time to understand what we need to do and start doing it.

There are a lot of complications beyond even these, and the decision will not be an easy one.