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Four Factors That Drive ACO Success

By Richard A. Royer

Participation in accountable care organizations (ACOs) has increased since Medicare introduced its new accountable care programs in 2012. According to the Centers for Medicare & Medicaid Services (CMS), 100 new ACOs will join the Medicare Shared Savings Program (MSSP) this year. Additionally, many new private ACOs will be formed in 2016. The goal, of course, of all these ACOs is to bring together providers and offer coordinated, high-quality health care and cost savings.

It’s clear from looking at the number of Medicare ACO program dropouts that not every ACO is successful. However, successful ACOs—particularly those that have graduated to a higher level of risk sharing—have found a formula for success that recognizes modern systems, capital, data, and leadership as contributing factors.

Government-backed accountable care programs take into consideration the learning curve that goes along with ACO participation. They provide opportunities to get started while still giving participants a chance to absorb lessons along the way. The MSSP is designed to be basically a training ground for fledgling ACOs. It consists of phases and allows ACOs to begin with limited liability so they can work to put in place the processes and systems they need while learning and progressing toward higher risk acceptance.

This year, 22 of the MSSP participants are operating in phase two or three. These organizations are moving in the direction of taking on a higher level of risk. Also, 21 participants have joined Medicare’s Next Generation ACO program, which is new in 2016. Due to this program’s more advanced nature, the ACOs selected to participate are “experienced in coordinating care for populations of patients, and [their] provider groups are ready to assume higher levels of financial risk and reward,” according to CMS.

ACOs that have proven their readiness to participate in aggressive shared-risk programs admit that the path is challenging—just applying to be part of an accountable care program can take several months. Focusing on the following areas makes it easier to not only survive in an accountable care program but also to eventually attain the desired payoffs.

Modern Systems
Accountable care is coordinated care. Providers within ACOs must be able to easily communicate details and share important clinical information to provide safe, appropriate, coordinated care and meet quality measures. Sharing information requires a solid IT infrastructure and modern systems that can transfer and receive data and link physicians, hospitals, specialists, nursing homes, and other providers across the care continuum. For this reason, interoperability is very much in demand.

Capital
To become flush with modern systems, organizations require capital. One reason businesses fail (in any industry, not just health care) is lack of capital. Organizations that either don’t start out with enough capital or use what they have too quickly have a difficult time creating the systems, training, processes, and leadership that lead to success. It’s best if, prior to launch, ACOs secure enough capital to support their efforts.

Data
Reliable data serve as the foundation for accountable care. However, the majority of health care providers do not have the know-how or ability to mine, analyze, and share patient data with other providers within an ACO. In the past, providers have primarily focused on managing the health of individuals. Few providers have experience collecting and analyzing data in order to manage the health of entire patient populations. Nevertheless, it’s a task ACOs must learn. This requires both strategic processes and technology. In many cases, the data piece of the puzzle is beyond the scope of what provider organizations can handle, making it a good idea to enlist an outside partner to help manage the project.

Leadership
An ACO’s culture—its attitude toward progress and change—can make or break the effort. Organizational leaders set the tone, with managers creating a culture that encourages innovation and flexibility. It’s important that those in charge not only have the know-how to lead quality improvement efforts but also can break away from the routine and embrace change.

A rigid culture can defeat even the best strategy. Putting the right leaders in place—people who are not afraid to discard old habits when data indicate a need for change—is essential.

As organizations that enter into ACO programs in 2016 will learn, it generally takes a year or more for benefits to materialize. Knowing what aspects to prioritize helps ensure that all of the planning, money, time, and effort put into forming an ACO will eventually pay dividends.