Joseph Rugg's Health Law Blog

HealthLeadersMedia published today an article titled “5 Reasons Why ACOs Could Fail.”  There is nothing new about these five reasons.  They are the ones all of us are aware of that haunt any effort these days to put together an integrated group of healthcare providers.  Nevertheless, it is good to be reminded of these issues, because if not confronted and conquered, no group of providers will be anything more than a confederation of solo practitioners.

Here are the five reasons:

1. EHR — Without EHR, there can be no integrated healthcare.  Many physician practices still do not have any form of electronic record system.  The recent CMS roll out of the EHR incentive program registration may spur some activity.

2.  Income Redistribution — ACOs must have a system for distributing the savings that are earned as a result of quality and utilization controls.  The problem is that the rewards are based on a paradigm shift from the current system that pays more for doing more.

3.  Lack of Patient Incentives — There are no economic reasons for patients to join an ACO or to cooperate in reducing costs relating to their care.

4.  Cost Management Confusion — Providers will need assistance from actuarial and insurance consultants in order to set up an ACO. 

5.  Cost Shifting — The physician practice industry is consolidating through hospital acquisitions and mergers, and this may force increases in private insurance costs through cost shifting.

The above five reasons are from the HealthLeadersMedia article. 

Here’s a sixth reason from me:

6.  Out of Pocket Costs — Related to some of the reasons listed above is the cost and time to establish a viable ACO.  Who will pay or reimburse the costs incurred by physician leaders who see longterm value in setting up an ACO? 

Leadership, early planning, and a willingness to invest in the future are needed to overcome these obstacles.  Can physicians do this on their own or will they wait for the hospitals and insurance companies to do it for them.  If they wait, physicians stand to lose much.