The New York Times (Small-Picture Approach Flips Medical Economics) has an upbeat piece about the potential for Accountable Care Organizations (ACOs) to improve quality and reduce costs. The article focuses on Fannie Cline, a diabetic patient in Chicago, whose provide organization, Advocate Health Care now has financial incentives to keep her out of the hospital.
Cline is happy to receive frequent calls from a nurse who coaches her on diet and exercise and coordinate her medical and social work appointments. And Advocate Health is confident in generating a substantial financial return on its investment in such care coordinators, because it is paid by Blue Cross as an ACO, presumably receiving a fixed fee per member rather than billing on a fee for service basis. As Advocate’s chief medical officer tells the Times, “It’s more than just economics. It’s the right thing to do.”
That’s good to hear, because for too long providers that do the right thing (like preventing hospital admissions where possible) have suffered financially rather than reaping any kind of reward. Putting the financial incentives in the right place is a smart and obvious idea that’s too often absent. ACOs won’t get things exactly right but they don’t need to. Most doctors and hospitals aren’t driven purely by financial goals, so as long as the incentives are directionally correct –in that they don’t get punished for doing what’s clearly the right thing, then it’s ok.
The HMO backlash in the 1990s was overblown and we’re still living with the consequences. It was easy to find horror stories about patients being denied needed care, but in truth most restrictions weren’t terribly onerous and patients could navigate their way around if they tired hard. Managed care did hold costs down for a few precious years and employers didn’t do nearly enough to defend the insurers when the backlash began. As a result we reverted to non-managed managed care such as Point of Service (POS) plans that were basically glorified fee for service arrangements.
There’s a great deal more understanding today that health care costs simply have to be contained. And yet there’s a serious danger that partisan and ideological attacks and charged words such as “rationing,” “government overreach” and “death panels” will set back the cost containment movement.
ACOs are far from perfect and are not the last word in health care cost and quality approaches, but it’s good to see them getting some favorable press.March 13, 2012