Like many other regulatory provisions, the development and effectiveness of accountable care organizations (ACOs) has come under widespread scrutiny. Skeptics have said both Centers for Medicare & Medicaid Services (CMS)-based and non-CMS-based ACO initiatives will fail to achieve much in the way of cost-savings.

A recent report, called “The ACO Surprise,” from the New York City-based consulting firm Oliver Wyman, has, to the contrary, found that the ACO movement is alive and well and full of promise.  The report indicated that up to 31 million patients are receiving care from provider organizations participating in a “population-oriented, value-based care delivery and reimbursement model,” which is how Oliver Wyman defines ACO as a catch-all term. At this number, the report’s authors say, roughly 10 percent of the population is getting their healthcare through ACOs, which they argue is “remarkably quick growth.”

Furthermore, the report’s authors argue that this climate represents only a fraction of the possible impact ACOs can have on healthcare delivery. With 45 percent of the population living in an area with an ACO, they are “well-positioned to drive change in the marketplace,” the authors say. They add that if providers, payers, and other healthcare entities recognize that an investment, from personnel, strategy, and financial perspectives, in a patient-centered ACO is the path to value-based care, the movement will “change the rules of the game.” Thus far, most ACOs aren’t “real ACOs,” and even those that are ahead of the pack, still have a long way to go.

The report uses several examples to illustrate this, including provider-payer collaborations in California and Massachusetts. To learn more about the report, Healthcare Informatics Associate Editor Gabriel Perna interviewed the report’s co-author, Rick Weil, Ph.D., a partner in Oliver Wyman’s health and life sciences practice, about the surprises, opportunities, and critics of the ACO movement.

Source: Oliver Wyman

Below are excerpts from that interview.

Your report is called the ACO surprise – why is it a surprise that ACOs have had such an impact?

I think what was most surprising to folks when you go back to when the Medicare Shared Savings program was first announced, the reaction from most of the market was fairly tepid at best. People noted it was not economically attractive for hospitals and health system, that there was complexity, uncertainty. The benefits were unclear. Recently, people rightfully pointed out, it’s still fee-for-service, it still is predicated on the system that rewards volume as opposed to value.

A lot of people were surprised at just how many organizations are participating in the program. I think the bigger surprise is that you have to look much more broadly than the Medicare Shared Savings program to get a full appreciation for the impact that program, more appropriately the value-based shift, is having.

Really, the big surprise is, it’s touching a lot more people and a lot more organizations than you would expect, and as you look forward, we’re expecting it to be more than double of where we’re at. The big surprise is just how far the market has come relative to what everyone was talking about when the program was first announced.

How did you determine that 31 million patients are receiving care from an ACO?

We keep track and work with a lot of different organizations across the country, both providers and payers, so we can see from the public announcements who is participating in the different shared savings programs. CMS makes that public. So we know where those organizations are, which markets, how many physicians are in those organizations, and how many patients are in the different primary care service areas. Then we do the same thing on the commercial side. That’s really the underpinnings of the analysis.

The surprise to us was that there was more activity on the commercial ACO side. Commercial payers are moving forward aggressively to value-based healthcare.

What is holding back so called ACOs from being, as you call them, “real ACOs?” What’s the main thing they are missing and what do they have to do to change that?

There’s no silver bullet. What you’re trying to accomplish in any ACO is a significantly higher level of patient engagement, accountability, and responsibility. You want to be patient-centered in your thinking, and you want to be working harder to keep [patients] themselves healthier through the different choices they’re making. And of course, there are significant changes to care delivery as well. You need to get the doctors to work differently with each other and other clinicians. There’s also the big shift from a more of a reactive care of the sick to a proactive mentality. It’s a big switch; you can’t really flip a switch. The whole clinical transformation; there’s no way to short circuit that, it’s time intensive, it takes a lot of effort. And then in order to make those models work, you need a different data infrastructure and a different analytics platform. All of these things take a lot of time. And you can’t go forward on any of this unless you have a committed leadership team and you have enough trust built up among participants to take what will feel like a leap of faith.

The report mentions the role payers play in successful ACO. How is this changing atmosphere bringing these two sides together?

In the prevailing environment, payers and providers lock horns because they are win-lose negotiations with each other and they are literally fighting over the same dollar. In the value-based world, the integrated supply chain that’s inclusive of the payers, providers, and everyone else is all tuned towards higher quality and lower costs. Everyone has the same goal and the incentive structure gets aligned so that as more valued is created, there is more value that is accrued to each of the participants. Sure, they’ll fight about how much value should accrue to one versus another. But that’s a different locking of horns, that’s how we split up the pie of value we’ve created for another versus how do I take more money away from you and give it to me. The nature of that relationship is very different.

For payers, they do have an important role to play in this. And to the extent they are able to provide the types of things the aspiring ACO needs, whether that’s data, infrastructure, or capital, as long as they have the right value-based contracting relationship with them, that’s going to be beneficial.

At what point will critics of ACOs acknowledge their effectiveness? How can they be won over?

I think you’re going to see the criticism persist for a long time. Some critics don’t like change, they don’t like the direction this is going. It’s threatening to a lot of different interests and they see some of that. The other piece is that you have a movement that’s very nascent and hasn’t had a big impact on cost and quality at the national level. Until that happens, critics are going to keep saying, ‘see it’s not working.’ Because of the magnitude of the change agenda, it’s appropriate to look for more leading indicators and think about whether it’s working or not, rather than look at the overall score.