High Hurdles: Leaders of Patient Care Organizations Participating in Medicare’s ACO Programs are Pushing Ahead Into the New Healthcare | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

High Hurdles: Leaders of Patient Care Organizations Participating in Medicare’s ACO Programs are Pushing Ahead Into the New Healthcare

July 9, 2014
by Mark Hagland
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The leaders of ACOs are working their way through a welter of immediate and longer-term issues

With 368 Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs) nationwide, and, according to recent estimates, well over 500 ACOs of some kind, including an ever-expanding group of collaborative arrangements between private health insurers and provider groups, the ACO concept is moving inexorably forward in U.S. healthcare. Indeed, even some of the challenges inherent in the shift to the ACO delivery-and-payment model—such as the announcement a year ago that seven of the Pioneer Medicare Shared Savings Program (MSSP) participant entities were shifting to regular MSSP status after failing to produce the level of cost savings expected of them under the terms of the Pioneer MSSP program, and two were leaving the MSSP program altogether—are leading to intensified work to ramp up ACO cost savings and outcomes gains.

(A Leavitt Partners analysis published in the Health Affairs blog in June found that “The Pioneer program generated $147 million in total savings [in 2012], with approximately $76 million in savings returned to ACOs. Of the original 32 Pioneer ACOs, 12 shared in savings, while 19 did not share in savings or losses. Only one ACO shared in losses.” Meanwhile, as that same analysis found, “Of the 114 MSSP ACOs”—the non-Pioneer ACOs—“54 kept costs below budget benchmarks and 29 of those saved more than 2 percent, thus qualifying for shared savings.”)

In fact, the ACO development work taking place these days is accelerating in the context of significant gains in ACO reach across the U.S. According to a study released in April by the New York-based Oliver Wyman consulting firm, “More than two-thirds of the U.S. population now live in localities served by accountable care organizations and more than 40 percent live in areas served by two or more.” Specifically, the Oliver Wyman researchers found that 67 percent of the U.S. population lives in a primary care service area with at least one ACO, compared to 45 percent in September 2013. That analysis was commissioned by the Department of Health and Human Services. The same report cited 368 Medicare ACOs nationwide as of April, and 522 ACOs of some kind, according to the Oliver Wyman estimate.

Still, though the Oliver Wyman report read as bullish overall (and the federal Centers for Medicare and Medicaid Services was able to report a total cost savings among all MSSP ACOs of $380 million in the first year of the program in 2012, $126 million over targeted savings),  it did note a number of challenges, particularly on the strategic IT side of things. Its authors noted that, “As healthcare providers experiment with new ways to deliver care, their IT systems have a hard time keeping up: traditional systems can’t support coordinated care, they do a poor job of maintaining relationships with patients, and they don’t even supply the basic data needed to manage a contract based on value.” Further, the report noted that, in an ideal world, ACOs would simply compel every participant entity (physician, physician group, hospital, etc.) involved in the same ACO to adopt the same core electronic health record (EHR); but the authors immediately conceded that such an approach would be “expensive, disruptive, and nearly impossible to achieve in a disseminated organization.” So what are the leaders of ACOs, both Medicare MSSP entities, and private ACOs, doing to overcome the broad strategic and IT-strategic challenges inherent in the shift to this new model of care delivery and payment?

Diverse efforts towards the same broad goals

ACO leaders interviewed for this story all agree on one thing: creating, developing, sustaining, and expanding accountable care organization models of all types is a very challenging and complex undertaking. At the same time, all are optimistic about the long-term prospects. Among the organizations making significant gains:


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