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The Waiting Game

November 26, 2013
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No one likes to be patient. It doesn’t matter if you’re a little kid who wants to know what they got for Christmas, a college student waiting for results from a mid-term, or an adult hoping to hear back from a job interview, delayed gratification is never easy.

Today, in the information age, if you want to know the answer to something? You look it up on Google immediately. This is the world in which we live.

That’s why, I have to admit, my recent conversation with David Muhlestein, Ph.D., was partly frustrating. It left a lot of questions unanswered and asked us to be patient. This is not a slight on Dr. Muhlestein, who gave an incredibly insightful interview and really opened my eyes, but rather the reality of the situation.

Just where is the accountable care organization (ACO) movement headed? We don’t know.

Here’s what we do know. As stated in a blog in Health Affairs from Muhlestein, the director of research at the Salt Lake City, Utah-based Leavitt Partners, from the end of 2010 to the beginning of the year, the number of ACOs rose dramatically from 42 to 464. This year, thus far, it’s only gone up from 464 to 493.

We know that the 32 Pioneer ACO organizations improved quality of care, but 12 didn’t achieve savings and nine of them dropped out of the program. According to Muhlestein, it was an administrative hurdle that caused those organizations to drop out. All of the organizations are still investing in some type of ACO activity.

What’s also a fact is that leading-edge providers, such as thoseones involved with the Pioneer ACO program and the regular Medicare Shared Savings Program, and leading-edge private payers, such as Cigna, Aetna, and Highmark, among others, will continue to be involved with ACOs. Whether it’s enhancing current agreements or forming new partnerships, I don’t see them putting everything they’ve done so far on hold.

For most organizations, however, it’s wait-and-see. That was the crux of what Muhlestein told me and why those ACO numbers, which graphed out like a late 1990s internet stock for a while, have gone relatively stagnant.

“Other organizations have been accepting risk-based contracts for almost two years, some even longer, and if you are waiting to take that, why do it now? If you wait six months or a year, you can see if they were successful. At this point, it makes a lot of sense to hold off for a little bit and have some proven models you can adopt from, rather than make the same mistakes these first ACOs were making,” Muhlestein told me.

It’s the same for many payers. Only when these payers and providers see proven models, does Muhlestein say these numbers will significantly tick back up. Furthermore, they need to see proven models for like organizations. What works for an academic medical center might not work for a physician group. This goes for IT investment as well.

 PricewaterhouseCoopers recently released a report that essentially echoed what Muhlestein told me. The authors spell the situation out in ink.

“Both payers and providers, deal activity based on investment theses of convergence remains cautious as parties continue to digest the financial results of the Medicare ACO pioneers,” the authors of the report wrote. “As investors consider what additional delivery or payment model reforms may be necessary to realize the promise of ACO cost reduction, deal activity based on payer-provider convergence may remain flat.”

What are some proven ACO models? What types of IT are necessary for organizations in an ACO? How can organizations make the economics of an ACO profitable? Within a year, Muhlestein tells me, it’s likely these questions will be answered. Until then, don’t go to Google expecting to get any gratification.

What do you think? Feel free to write something in the comments below or tweet me at @HCI_GPerna.