The Top Pitfalls in Commercial ACO Shared-Risk Arrangements

A response from Archway Health Founder and CEO Dave Terry was recently published in the Thought Leader's Corner in the Accountable Care News newsletter. In this section, various healthcare industry experts were asked to answer the following question: "What are the top pitfalls in commercial ACO shared-risk arrangements?" Here is Dave's response:

Commercial ACOs face three significant challenges: multiple business models, new investments and cross-organizational buy-in.

The first issue is trying to operate in two opposing reimbursement systems. Almost every provider organization in the country generates most of its revenue through a fee-for-service model, with incentives that drive more utilization. Yet in the ACO model, incentives are the opposite: They drive value through reducing utilization and partnering with efficient, lower-priced providers.

It is hard for any organization to operate within opposing business models, particularly so for healthcare professionals who often feel morally obligated to treat every patient the same regardless of how their bill gets paid. In order to fully embrace an ACO model, providers need to have 40% to 50% of their revenue derived through risk models with an expectation that they will move toward more than 75% in the next few years.

A second issue is investing in the tools and infrastructure required to succeed within an ACO model. These include claims data analytics, care management teams, patient tracking tools, reinsurance products and sophisticated management teams.

A third issue is gaining buy-in from primary care and specialist physicians within a network. Succeeding within an ACO requires doctors to change the way they deliver care. These changes include physician staffing ratios, new referral partnerships, changes in clinical protocols, increased use of nurse practitioners and physician assistants, better patient communication, telehealth and new ways to use data.

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