New Healthcare Business Model or Edsel Model?
By David Edward Marcinko MBA
According to our Medical Executive-Post Health Dictionary Series of administrative terms http://www.springerpub.com/Search/marcinko, and health economist and colleague Robert James Cimasi MHA, ASA, AVA CMP™ of www.HealthCapital.com; an ACO is a healthcare organization in which a set of providers, usually large physician groups and hospitals, are held accountable for the cost and quality of care delivered to a specific local population.
ACOs aim to affect provider’s patient expenditures and outcomes by integrating clinical and administrative departments to coordinate care and share financial risk.
Since their four-page introduction in the PP-ACA of 2010, ACOs have been implemented in both the Federal and commercial healthcare markets, with 32 Pioneer ACOs selected (on December 19, 2011), 116 Federal applications accepted (on April 10, 2012 and July 9, 2012), and at least 160 or more Commercial ACOs in existence today.
Federal ACO contracts are established between an ACO and CMS, and are regulated under the CMS Medicare Shared Savings Program (MSSP) Final Rule, published November 2, 2011. ACOs participating in the MSSP are accountable for the health outcomes, represented by 33 quality metrics, and Medicare beneficiary expenditures of a prospectively assigned population of Medicare beneficiaries.
If a Federal ACO achieves Medicare beneficiary expenditures below a CMS established benchmark (and meets quality targets), they are eligible to receive a portion of the achieved Medicare beneficiary expenditure savings, in the form of a shared savings payment.
Commercial ACO contracts are not limited by any specific legislation, only by the contract between the ACO and a commercial payor.
In addition to shared savings models, Commercial ACOs may incentivize lower costs and improved patient outcomes through reimbursement models that share risk between the payor and the providers, i.e., pay for performance compensation arrangements and/or partial to full capitation.
Although commercial ACOs experience a greater degree of flexibility in their structure and reimbursement, the principals for success for both Federal ACOs and Commercial ACOs are similar.
Dr. David E. Marcinko with 1960 Ford Edsel
[© iMBA, Inc. All rights reserved, USA.]
[The Edsel was an automobile marque that was planned, developed, and manufactured by the Ford Motor Company during the 1958, 1959, and 1960 model years. With the Edsel, Ford had expected to make significant inroads into the market share of both General Motors and Chrysler and close the gap between itself and GM in the domestic American automotive market. But, contrary to Ford’s internal plans and projections, the Edsel never gained popularity with contemporary American car buyers and sold poorly. The Ford Motor Company lost millions of dollars on the Edsel’s development, manufacturing and marketing].
Although nearly any healthcare enterprise can integrate and become an ACO, larger enterprises, may be best suited for ACO status.
Larger organizations are more able to accommodate the significant capital requirements of ACO development, implementation, and operation (e.g., healthcare information technology), and sustain the sufficient number of beneficiaries to have a significant impact on quality and cost metrics.
But, will this new B-Model work? Isn’t leading doctors in a shared collaborative effort a bit like herding cats? And, what about patients, HIEs, outcomes management, data analytics and … Population Health via our colleague David B. Nash MD MBA of Thomas Jefferson University, often considered the “father” of Pop Health?
OR, what about the developing IRS scandal and full PP-ACA launch in 2014? Will it affect federal funding, full roll-out, or even repeal of the entire Act?
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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Filed under: Healh Law & Policy, Health Economics, Health Insurance, Healthcare Finance, Research & Development Tagged: | ACA, Accountable Care Organization, CMS, David Nash, edsel, HealthCapital.com, HIE's, Medicaid, medicare, Medicare Shared Savings program, Population Health, robert james cimasi