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Catalyst for Payment Reform’s Suzanne Delbanco on ACO Measurement and the CVS-Aetna Deal

December 8, 2017
by Mark Hagland
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Catalyst for Payment Reform’s Suzanne Delbanco, Ph.D., shares her perspectives on value in this moment

As the landscape of healthcare changes at lightning speed, stakeholder organizations from every group in the constellation—the public and private purchasers and payers of healthcare, pharmacy benefit management (PBM) companies, providers of all types, and consumers—are being affected by constant disruptions.

One has been unprecedented business deals, such as the announcement Dec. 5 that mega-pharmacy retailer CVS is acquiring the Hartford, Conn.-based Aetna, one of the nation’s largest health plans—deals that are potentially reordering the contracting and operational landscape for employer-purchasers, health insurers, PBMs, retail pharmacies, hospitals, physicians, and consumers, alike—in unanticipated ways.

Meanwhile, organizations like the Berkeley, Calif.-based Catalyst for Payment Reform are working to prod forward the journey towards value in healthcare, as evidenced by an announcement Dec. 4 that the organization had created a new vehicle for understanding accountable care organization (ACO) contracting terms. A press release on that date stated that, “Catalyst for Payment Reform (CPR) today called on employers and other health care purchasers to unite in holding health plans accountable for the performance of their accountable care organizations (ACOs) by asking them to report a consistent set of performance metrics to their employer-purchaser customers—as easy to read as a nutrition label.”

As the Dec. 4 press release explained it, “To drive this change, CPR released a unique set of resources called Standardized Plan ACO Reporting for Customers (SPARC) that employers, state Medicaid, employee and retiree agencies and other health care purchasers can use to assess their health plans’ strategies to use ACOs to improve the delivery of care and make it more affordable. CPR developed SPARC in conjunction with Willis Towers Watson and major health care purchasers to answer growing purchaser demand for greater transparency into ACO design and performance. Purchasers put the onus on health plans because they rely on them as their agents in the market place.”

The press release quoted Suzanne Delbanco, Ph.D., CPR’s executive director, as saying that “Purchasers want better, more affordable care for their employees, and ACOs offer a potential way to bend the cost curve while also addressing patient needs more holistically. Unfortunately, they lack a standard, meaningful way to measure and compare ACO performance, which makes it difficult to justify the additional fees and potential disruption for employees that ACOs can generate,” Delbanco said. “SPARC offers a robust way to dissect and evaluate a health plan’s ACO arrangements so that purchasers know whether they are getting good value for their populations and for their health care spending.”


Suzanne Delbanco, Ph.D.

Dr. Delbanco spoke with Healthcare Informatics Editor-in-Chief Mark Hagland regarding both subjects, following the release of the SPARC announcement on Monday. Below are excerpts from that interview.

Let’s begin by discussing the CVS-Aetna deal. What are your perspectives on it, and on its potential disruption to established patterns of activity among the various healthcare stakeholder groups?

At the heart of it, the question is whether or not this relationship will be good for those who use and who pay for, healthcare. And I always worry on behalf of employers when consolidation occurs, because it rarely leads to lower costs or a better healthcare system. That said, this is not a typical horizontal merger or acquisition within the same space. So it’s possible that there could be better continuity or coordination of care, by bringing together a health plan with a retailer and PBM; only time will tell.

Consolidation has not necessarily led to greater value, then? That is a perspective held by many—when speaking of health plan and provider consolidation.

We know for sure in the healthcare provider space, that when there’s consolidation, that prices go up, and there’s no evidence that quality gets better; in fact, there’s some evidence that it gets worse. In the health plan space, there’s some evidence that consolidated health plans can do a better job at negotiating for lower prices; but what ultimately is a problem for both the employer and consumer, is that there are fewer and fewer choices—when you chose a PCP [primary care physician], specialist, or treatment, that there’s less and less competition involved that can lead better choices and offer lower prices. That’s what I worry about here; hopefully, they’ll create a nirvana of healthcare. But based on past evidence, unfortunately, this is not guaranteed.

One of the aims of Aetna leaders, according to news reports, is the potential for better pharmacy benefit management, based on a closer integration of health plan, pharmacy benefit management, and retail pharmacy operations interactions. What do you think about that potential?

I think we have a mess right now in the pharmacy space. Everyone likes to point fingers: it’s the pharmaceutical companies, it’s the PB managers, it’s direct-to-consumer advertising. But whether or not this creates greater value, will depend on relationships that CVS has with manufacturers, among other factors. So I don’t know that it’s a done deal, that they’ll instantly move to the highest level of value in this context.

Could the CVS-Aetna deal potentially lead to a good kind of disruption on the physician side, compelling physicians to compete on the basis of convenience?

I think there are pros and cons. There’s no question that we need greater access to primary care. And telehealth has introduced competition in some markets by reducing potential over-utilization by offering more immediate access. You could see a doc-in-the-box or nurse-practitioner-in-the-box set-up potentially helping; but will they provide a better service than telemedicine-facilitated care? It depends. And also, per continuity of care, will the relationship with Aetna somehow enhance the communications back to the primary care provider? In theory, but we’ll only know as it plays out.

Do you see this as a harbinger of the future, or might it be a unique business deal?

I think we’re seeing all kinds of consolidation in many sectors of the economy. So, I think this is likely to continue. Disruption is always good, if it keeps incumbents on their toes and provides better service and quality. But sometimes, the benefit goes to the corporations. And there’s still money to be made, and organizations will want to keep a step ahead of the competition.

In other words, the jury’s out on all this?

Yes, that’s what I would say.

Now, please tell me a bit about your organization’s announcement on Monday of your new tool for measurement.

Employers and other healthcare purchasers, whether they have proactively sought it or not, have more and more covered lives covered by ACOs. There are some rare instances of employers forming ACO contracts, but usually, it’s through health plans. And employers have been hopeful that ACOs would pan out, but increasingly, are feeling they’re not getting the full story about how their ACOs are working out. So we’ve put out a template here, for how employers want health plans to report to them on the quality, cost and utilization metrics. We were seeing a few spotty measures reported back to the employers, and almost always, the results were positive, with a rosy light. So we’ve just put out an announcement of employers that have committed to pushing their health plans to use this format, and benefits managers who have committed to using the format also.

So, you believe that standardization of reporting will force value into the system?

Yes, the idea is that if they have to report the whole story by yardstick they can’t change, employers will get a better idea of the success of ACOs. Do they want to partner with health plans to make these ACOs more successful? To contract for their own? To back away? So the idea is to help employers get a better idea of what’s going on.

Would you say that the ACO venture has overall been successful, so far?

Well, it’s certainly moving fast, whether we believe it’s god or not. There’s been some good reporting on the public side, but there’s been very little transparency on the commercial side, where we’re eager to see more results shared. So part of the thinking behind putting out a standardized ACO results report is that it will provide more feedback to employers on whether the strategy is working or not.

What thoughts might you like to share about all of this, with provider leaders?

I think employers are hopeful that the delivery and payment reforms afoot will ultimately benefit employers and patients. But they’re sober about it; they’re not just jumping on the bandwagon; they want proof. So the better the information they can obtain, the more likely they’ll join with health plans to make these changes long-lived and to work to improve them. Those footing the bill need to do what they can to ensure success. And providers need to partner with the health plans to get good information back to employers.

And clearly, data and information will be absolutely critical to making value-based healthcare delivery and payment models work, correct? Data and information will be critical to help providers to be successful in developing ACOs.

Yes, for providers to succeed as ACOs, they need near-real-time information on the cost and quality sides, and IT plays such an important role there, and can provide great results in terms of providing quality, utilization, and cost metrics. So the IT staff at ACOs are a critical piece to these delivery systems providing value.

 

 


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Check and Checkmate: Is the Debate Around the MSSP ACO Program About to Get Super-Heated?

September 12, 2018
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Will NAACOS’s just-published study turn the tables on senior CMS officials? Or will it be ignored?

Something really quite extraordinary happened this week: NAACOS, the Washington, D.C.-based National Association of Accountable Care Organizations, published, in the august journal Health Affairs, a study based on research that NAACOS leaders had commissioned from Dobson DaVanzo & Associates, a healthcare economics consulting firm. And, as Healthcare Informatics Managing Editor Rajiv Leventhal noted in his report, “Medicare’s largest ACO (accountable care organization) initiative—the Medicare Shared Savings Program (MSSP)—generated gross savings of $1.84 billion for Medicare from 2013 to 2015, nearly double the $954 million estimated by the Centers for Medicare and Medicaid Services (CMS),” according to the NAACOS/Dobson DaVanzo & Associates study.

And here’s what’s extraordinary about that: this is the first time in my memory that I’ve seen a national association of provider organizations commission independent research that directly contradicted federal government findings and statistics. Could this be the start of a major conflict over the direction of the MSSP program? The potential for actual conflict here is quite real. But first, let’s look at what NAACOS and Dobson DaVanzo found. As Leventhal noted, “The study, which used similar scientific methods as a 2018 peer-reviewed paper by Harvard researchers published in The New England Journal of Medicine, found that MSSP ACOs reduced Medicare spending by $541.7 million during the 2013 to 2015 timeframe, after accounting for shared-savings payments earned by ACOs.”

The MSSP is the largest value-based payment model in the U.S., growing to 561 ACOs with more than 350,000 providers caring for 10.5 million Medicare beneficiaries in 2018. Under current MSSP rules, new ACOs are eligible to share savings with Medicare for up to six years if they meet quality and spending goals but are not at financial risk for any losses. As such, CMS has been reiterating in recent months that these “upside risk-only” ACOs are costing the government money.

What’s more, as Leventhal noted, “To this point, in a recent proposed rule that has so far been met with varying degrees of scrutiny, CMS is proposing to shorten that glide path for new ACOs to assume financial risk, reducing time in a one-sided risk model from the current six years to two years. This proposal, coupled with CMS’ recommendations to cut potential shared savings in half—from 50 percent to 25 percent for one-sided risk ACOs—will certainly deter new entrants to the MSSP ACO program. Importantly, CMS has essentially said they don’t mind if upside-only ACOs that are costing the government money leave the program if they aren’t willing to take on more financial risk. CMS Administration Seema Verma said in a press call following the proposed rule’s release that ‘[Upside-only] ACOs have no incentive, at all, to reduce healthcare costs while improving outcomes, as they were intended.’ Nonetheless, MSSP ACO participants seemingly performed quite well in 2017, despite CMS’ claims that they have been largely ineffective. In sum, the 472 ACOs that were in this model last year achieved $314 million in net savings to Medicare in 2017 after accounting for bonuses paid from the government, and $1.1 billion overall.”

For the NAACOS leaders, the key element here is that, as the authors of the Health Affairs article pointed out, “Despite the positive 2017 results, gauging MSSP performance based on calculations using administratively derived spending targets (benchmarks) is simply not an accurate way to measure overall program savings. In fact, the published academic research on MSSP performance points to much higher savings than are suggested by the benchmarks.”

Explained further by the researchers, for its analysis of Medicare ACOs, “CMS calculates an initial risk-adjusted spending benchmark for each ACO based on its historical spending for a group of attributed Medicare beneficiaries; it then trends this benchmark forward to the current program year based on the national average growth in Medicare spending per beneficiary.” The article’s authors further point out that if an ACO’s spending is less than the benchmark, and has a savings rate of at least 2 percent—and the ACO meets MSSP quality thresholds—it earns a shared savings payment that is typically 50 percent of the calculated savings. CMS then calculates total MSSP savings as the sum of total savings for ACOs with spending below the benchmark, plus the sum of spending above the benchmark for ACOs that exceeded it. Using this method, CMS estimated MSSP savings of $954 million between 2013 and 2015. During this period, ACOs that saved money earned $1.3 billion in shared savings payments. CMS concluded that on a net basis, the program increased Medicare spending by $344 million between 2013 and 2015, according to the NAACOS analysis and Health Affairs commentary.

At this juncture, there is an obvious issue here, because CMS’s calculation method implicitly makes it difficult for ACOs to show progress, since savings are benchmarked against administratively derived targets, rather than actual savings. Who came up with that method, anyway???

And the implications of using such a method are clear. As the press release that NAACOS issued upon the publication of the Health Affairs article noted, “Despite the growing ACO track record of improving quality and saving Medicare money, CMS, in an August 17 proposed rule, moved to shorten the time new ACOs can remain in the shared-savings-only model from the current six years to two years. Data show ACOs need more than two years to begin showing the benefits of forming an ACO. That proposal, coupled with CMS’s move to cut shared savings in half — from 50 percent to 25 percent for shared-savings-only ACOs — would deter new Medicare ACOs from forming.”

What’s more, the press release quoted Stephen Nuckolls, CEO of Coastal Carolina Quality Care in New Bern, N.C., which includes 63 providers caring for 11,000 Medicare beneficiaries, as stating that “It takes time and money to transform entrenched care delivery practices in local communities and build the critical mass to successfully integrate care, manage risk, and improve quality while reducing spending growth. Unfortunately, the proposed changes will hold up the move to value-based care by significantly undermining the business case to voluntarily form new Medicare ACOs.” 

I take Mr. Nuckolls’s charge very seriously. I interviewed him recently, and as he noted in our interview, when asked the secret of his ACO’s success so far in the six-plus years in which Coastal Carolina Quality Care has participated in the MSSP program, “[I]t takes time for some of these strategies, such as population health, to pay off. Another thing that’s going on is that our care management program, I give credit for keeping our costs low and getting things in place. And in addition,” he told me, “we really made a lot of strides in our first contract cycle, specific to our market. All of our annual wellness visits and preventive care, we made our marks there and that positioned us well in our second contract cycle. And it just takes time, when you focus on the quality of care, for… when a greater percentage of your patients have their blood pressure under control, you’ll have fewer adverse events. And when you work to lower a1cs, that will avert events over time. And annual wellness visits, vaccinations, screening services—it costs money for screenings; and once you get things set up, that’s then in place. And care management services—when you go into your second contract cycle, you have some of those costs worked into your contract cycle the second time; so it takes time to achieve shared savings, and to get the staff to focus on the sickest population.”

What’s more, what Nuckolls told me in our interview reflects what virtually every ACO leader I and my colleagues at Healthcare Informatics have heard from ACO senior executives—that it takes several years to lay the foundations for ACO success.

What’s more, Nuckolls told me, the results revealed in this data review-based study and article are important, as they speak to “the policy point—organizations are truly saving the government money, even if it doesn’t immediately show on paper. The evidence doesn’t support the idea that ACOs should be kicked out because they have a bad benchmark. The true savings to the Medicare Trust Fund will then be less. And that’s what they need to focus on, achieving true savings to the government.”

So, the obvious question now is, what will happen next? Will CMS Administrator Seema Verma lash out against NAACOS, denouncing this “rival” analysis of MSSP ACO savings? Will she ignore it? Or will she reach out to NAACOS’s leaders, and attempt to find common ground, as the “Pathways For Success” program potentially threatens the expansion of the voluntary MSSP program? It feels as though a lot is hanging in the balance right now, because if the national association representing ACOs has just come out with what is implicitly a denunciation of CMS’s method for calculating ACO progress and success, that is a fairly major “j’accuse” that Administrator Verma and her fellow senior CMS and HHS officials would do well to consider carefully. So the next move on this chessboard is Ms. Verma’s. And who knows what that move might look like?

 

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Seema Verma’s Big Picture: Tough Love, ACO Acceleration, Interoperability, and Consumer Empowerment?

August 29, 2018
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Will CMS Administrator Seema Verma’s strategy of pushing hard on providers around ACO development and interoperability help to accelerate the shift to value-based healthcare—or will it backfire?

Whatever may come, CMS Administrator Seema Verma is standing steadfast in her “tough-love” stances towards providers when it comes to ACO development. As Healthcare Informatics Associate Editor Heather Landi wrote on Monday, “During a webinar sponsored by the Accountable Care Learning Collaborative Monday morning, Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma reiterated the agency’s focus on pushing healthcare providers in accountable care organizations (ACOs) to take on two-sided risk while also addressing CMS’s commitment to try to remove barriers to value-based care.”

Further, Landi wrote, “During the 30-minute webinar sponsored by ACLC, a Salt Lake City-based accountable care collaborative, Verma discussed the sweeping changes that CMS is proposing for the Medicare Shared Savings Program (MSSP), noting that ‘it is time to take the next step.’ On August 9, CMS proposed a rule that included major changes to the existing MSSP ACO program, with the goal to push ACO organizations into two-sided risk models by shortening the duration of one-sided risk model contracts. Referred to as “Pathways to Success,” CMS’ proposal looks to redesign the program’s participation options by removing the traditional three tracks in the MSSP model and replacing them with two tracks that eligible ACOs would enter into for an agreement period of no less than five years: the BASIC track and the ENHANCED track. Verma’s comments on Monday morning emphasized CMS’s firm stance on pushing healthcare providers to take on more risk, as well as CMS’s strategy of giving providers more flexibility—such as waivers around telehealth—as a reward to transitioning to value-based care.”

What’s more, Administrator Verma came to the webinar with data. As Landi reported yesterday, “For the 2016 performance year, the Next Gen ACO Model generated net savings to Medicare of approximately $62 million while maintaining quality of care for beneficiaries, according to CMS. Overall, that represents a net reduction of 1.1 percent in Medicare spending within that program, Verma said. The Next Gen ACO model began in January 2016 with an initial cohort of 18 participants. It should be noted that 15 out of the 18 NGACOs had prior Medicare ACO experience.

Verma was not shy about what she thought those metrics meant. “What this really shows is that these Next Gen ACOs are taking the highest levels of risk and they’ve managed to maintain quality while still lowering cost,” Verma said during the webinar. “Much of the savings achieved by the Next Gen ACOs were largely due to reductions in hospital spending and spending in skilled nursing facilities, and that’s very consistent with what we’ve seen with how other two-sided ACOs have achieved savings. We’re excited about this; we think it’s a very strong start.”

Good cop, bad cop?

I’m impossible not to contrast Verma’s statements about the Next Gen ACO program with how CMS characterized the proposal it released just three weeks ago, on August 9. On that date, as Managing Editor Rajiv Leventhal and Associate Editor Heather Landi reported, “The Centers for Medicare & Medicaid Services (CMS) is proposing a new direction for ACOs (accountable care organizations) in the Medicare Shared Savings Program (MSSP), with the goal to push these organizations into two-sided risk models.”

Further, they wrote, “Referred to as ‘Pathways to Success,’ CMS’ proposal, which has been expected for a few months, looks to redesign the program’s participation options by removing the traditional three tracks in the MSSP model and replacing them with two tracks that eligible ACOs would enter into for an agreement period of no less than five years: the BASIC track, which would allow eligible ACOs to begin under a one-sided model and incrementally phase-in higher levels of risk; and the ENHANCED track, which is based on the program’s existing Track 3, providing additional tools and flexibility for ACOs that take on the highest level of risk and potential rewards. At the highest level, BASIC ACOs would qualify as an Advanced Alternative Payment Model (APM) under the Quality Payment Program.”

And, Seema Verma has made numerous comments now in numerous speeches to numerous different healthcare groups, making it very clear that she is becoming impatient with the pace of change in U.S. healthcare, and is determined to do something about it—with the support of Health and Human Services Secretary Alex Azar, her boss.

Indeed, Verma’s first in a series of speeches around interrelated topics of value-based payment and care delivery, patient/consumer empowerment, interoperability, and technology advancement, came as early as the HIMSS Conference in Las Vegas, where, on March 6, she “spoke of the need to move forward to empower patients with their data and information, in remarkably personal terms, recounting an episode in which her husband had collapsed while the two of them were not together, and was rushed to an emergency department, for what turned out to be heart failure,” as I reported at the time.  In the wake of her husband’s health crisis, she experienced the difficulty of accessing her husband’s health record, as an authorized family member. And that experience, she said, particularly animated the development of the MyHealthEData initiative she was unveiling on that date.

“The reality,” Verma said, “is that once the information is freely flowing from patient to provider, the advances in coordinated, value-based care, will be greater than anything we could imagine today she said back in March. Things could have been different for my family if my husband could have authorized me to have his health records on his phone,” she said. “Or if he could have notified me that he was in distress. And better yet, maybe we could have predicted his cardiac arrest days before, if his watch could have tracked his health data, and sending that data to alert his doctor, and possibly prevent what happened. My husband is part of the 1 percent that survives his condition. We shouldn’t have to depend on chance” for that type of outcome, she emphasized.

The big picture: pushing on several levels at once?

It seems clear that Azar and Verma—certainly, with the help of Donald Rucker, M.D., National Coordinator for Health IT—are determined to acceleration the transition of U.S. healthcare providers into value-based healthcare, through a combination of different incentives, including a wide variety of carrots and sticks. And, not to mix too many metaphors here, but it also seems clear that her praise of the progress made by the Next Gen ACO program ACOs is evidently a “good cop” positioning, while she largely framed the relatively modest progress in the MSSP program in a “bad cop” sort of way, essentially telling MSSP ACO leaders that it was time to stop with upside-only risk, and move into two-sided risk as quickly as possible.

Of course, the risks in this kind of approach are significant. Not surprisingly, the National Association of ACOs (NAACOs) heaped scorn on the August 9 “Pathways to Success” proposal, with NAACOS CEO Clif Gaus saying in a statement released that evening, that “The administration’s proposed changes to the ACO program will halt transformation to a higher quality, more affordable, patient-centered healthcare industry, stunting efforts to improve and coordinate care for millions of Medicare beneficiaries.” According to Gaus, “The downside financial risk for patient care would be on top of the significant financial investments ACOs already make, jeopardizing years of effort and investment to improve care coordination and slow cost growth.” He continued, “CMS discusses creating stability for ACOs by moving to five-year agreements, but they are pulling the rug out from ACOs by redoing the program in a short timeframe with untested and troubling polices.”

So it seems to me that Azar, Verma, and Rucker, and their colleagues, are in a bit of a challenging place here, because even as the progress has been measurably stronger in the Next Gen ACO program compared with that in the MSSP program, even in Next Gen, it hasn’t been spectacular. Meanwhile, Verma’s attempts to push down harder on the levers of payment and regulation in order to turbocharge ACOs, could very easily backfire, causing more ACOs to leave the MSSP program than to switch to two-sided risk.

So this is a delicate, complicated moment. Will “tough love” and “good cop, bad cop” strategies at HHS and CMS really work? Only time will tell—but this feels like an important moment in the evolution of value-based healthcare, with no clear answers as to how HHS (the Department of Health and Human Services) and CMS officials might be successful in forcing transformational change forward, at a time when the coming U.S. healthcare cost cliff is looming more closely than ever before, just up a head. As Bette Davis said, as Margo Channing, in Joseph L. Mankiewiecz’s 1950 film “All About Eve,” “Fasten your seat belts—it’s going to be a bumpy night!”

 

 

 

 

 

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PODCAST: Dr. Rita Numerof on CMS’ New ACO Proposals: “It’s Been a Long Time Coming”

August 23, 2018
by Rajiv Leventhal, Managing Editor
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Earlier this month, the Centers for Medicare & Medicaid Services (CMS) proposed a rule that included major changes to the existing MSSP ACO (accountable care organization) program. As Healthcare Informatics reported, referred to as “Pathways to Success,” CMS’ proposal, which has been expected for a few months, looks to redesign the program’s participation options by removing the traditional three tracks in the MSSP model and replacing them with two tracks that eligible ACOs would enter into for an agreement period of no less than five years: the BASIC track and the ENHANCED track.

The broad takeaway from the proposal is that CMS has a clear goal to move ACOs more quickly into two-sided-risk models as the agency has noted that upside-only ACOs are not reducing costs and are costing Medicare money. “We project these changes will result in $2.24 billion in savings to Medicare program over next 10 years,” CMS Administrator Seema Verma stated at the time of the proposal.

Rita Numerof, Ph.D., co-founder and president of St. Louis-based consulting firm Numerof & Associates—and a recurring guest on the Healthcare Informatics podcast, notes that CMS has been trying to bend the cost curve for years. “They have been experimenting with different ways to ‘encourage’ providers to move in a direction to take on more risk. So I applaud CMS’ move to require ACOs to take on more risk, both upside and downside,” says Numerof on our latest podcast episode.

On the podcast, Numerof ponders, “Have ACOs been a good investment of taxpayer dollars? We are all paying for this. I would argue that they have been an expensive experiment. The intent was laudable…But the business model is fundamentally broken, and the underpinnings need to be changed.”

The podcast with Numerof runs about 20 minutes in length and keep in mind, you can listen to all Healthcare Informatics podcasts right here.

 


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