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Accountable Care Organizations 101

The U.S. is in the midst of the most significant shift in healthcare delivery seen in decades. The driving factors are many, and include:

  • Skyrocketing costs: The U.S. government will spend $1.8 trillion on healthcare over the next decade.
  • Rise of chronic disease: Nearly half of Americans now manage a chronic disease.
  • Increase in demand: Ten thousand baby boomers turn 65 each day, putting added stress on the healthcare system.
  • Physician shortages: The shortage of primary care physicians (PCPs) is estimated to reach 63,000 in 2015.
  • Rising consumerism: More than 50 public websites allow patients to report and rate practices and providers, creating a new reputation management role for physicians.

The Affordable Care Act (ACA) was created to solve these complex health challenges by shifting the healthcare market away from the traditional fee-for-service structure to a new quality-based system that rewards providers for lowering healthcare spend and improving the quality of patient care.

Accountable Care Organizations (ACOs) are a powerful way for providers of healthcare to improve care and reduce costs. ACOs are groups of physicians, hospitals and other healthcare providers that band together to provide coordinated patient care. The objective of coordinated care is to ensure that all patients get the care they need when they need it – reducing hospital visits, eliminating duplication of services, and preventing medical errors.

Under the ACA, the Center for Medicare and Medicaid Services (CMS) created several ACOs in an effort to achieve its three-part goal known as the Triple Aim.  The ACA also requires each ACO to manage at least 5,000 Medicare beneficiaries for three years.

In return, Medicare offers greater incentives for providers that coordinate patient care through ACOs and demonstrate lower costs in the process. In addition to increased payments, ACOs can earn additional income if they are able to reduce spending among their assigned Medicare beneficiaries.

What to Look for in an ACO

Many independent providers and smaller practices are ill equipped to respond to the above-mentioned market drivers and federal changes – and end up being swallowed by larger hospital systems that have the capital for the infrastructure needed to meet new demands and requirements.

ACOs allow independent providers and smaller practices to partake in advantageous arrangements with Medicare, as well as other groups that reward quality patient care and cost savings.

ACOs also:

  • Share data and enable communication with other providers to coordinate care
  • Develop Clinical Integration (CI) programs to improve quality and reduce spend
  • Install technology infrastructure to facilitate team-based care (such as Privia’s Population Health Management System)
  • Measure outcomes and cost savings
  • Collect and distribute savings/reimbursements

As a result, independent physicians and small healthcare groups can remain autonomous while tapping all the cost-saving benefits ACOs have to offer.

But not all ACO networks are created equal. The Health Affairs journal outlines a few considerations before creating or joining an ACO. They include:

  • Measurable outcomes: The crux of ACOs is improved quality of care and reduced costs. In order to be successful, an ACO must demonstrate measured success in both areas.
  • Clear, coordinated care: Can your ACO support targeted care management? Seamless information sharing – including electronic patient records and online data administration – is essential to the success of any ACO.
  • Shared risk: As Health Affairs states, ACOs will ideally be subject to a shared-risk payment system in which savings are distributed based on meeting cost and quality goals. Having a little skin in the game helps all participants keep their eye on the ball.

The healthcare shift is happening, and it can have a direct impact on your bottom line. Is your practice ready? Learn how Privia Health is helping providers transition to patient-centered care with tools to navigate federal changes – and boost revenue along the way.

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