Administering an Accountable Care Organization (ACO)

An illustration of transforming to an accountable care organization
An Accountable Care Organization shifts focus from individual expenses to total cost of care.

Forming an Accountable Care Organization challenges the traditional paradigm of how organizations have traditionally achieved success on the bottom line. As a hospital executive, you are used to driving revenue by bringing volume into the hospital. The more beds filled, particularly with profitable service lines, the more you can grow your top line. Focusing on expense management within the walls of the hospital allows you to achieve a profit. What happens when the patient leaves the hospital is largely not relevant to these metrics.

Now, put on the hat of an Accountable Care Organization leader. He or she looks at the world very differently, no matter which of the healthcare payment models the organization follows (shared savings, upside only, full risk, etc.). Every time a patient touches the hospital it is an expense to the budget or savings. What happens within the walls of the hospital is largely irrelevant, especially in a diagnosis-related, groups-based (DRGB) reimbursement model. What happens to the hospital's bottom line is also not relevant to the Accountable Care Organization leader.

The reality is that the umbrella organization needs to thrive: Both the Accountable Care Organization leader and the hospital leader have to succeed. The Accountable Care Organization can succeed without negatively impacting the overall system by focusing on areas such as growing the network, minimizing network leakage, focusing on drug costs, and improving the overall quality of care to minimize hospitalizations and readmissions—where costs are always greater than revenue.

There are ways to achieve a win-win result, but it is our experience that you need to put the right programs in place and those programs need to be supported by information to achieve success.

Accountable Care Organizations & Risk Management

Creating a successful Accountable Care Organization requires the ability to deliver effective and efficient care across a group of healthcare providers. McKesson ACO Management Services can help healthcare systems build the foundation to assume financial risk for the health of their patient populations.

An Accountable Care Organization's plan for risk management in healthcare must balance the interrelated aspects of quality and cost efficiency. Improving overall costs requires Accountable Care Organizations to manage the total cost of care. This involves reducing variations in physician practice patterns, including spending on drugs and imaging, length of stay, readmissions, emergency department utilization, and other cost-intensive services. Accountable Care Organizations should also seek to leverage the network efficiently, focusing on aligning patients with the most appropriate care setting and care team for their needs.

In order to effectively and safely manage risk for a given population, an Accountable Care Organization must be able to analyze and segment its patient pool into discrete, actionable populations using predictive healthcare analytics. Once identified, these populations can then be risk-stratified to determine financial and clinical opportunities to improve both quality and cost.

As an Accountable Care Organization takes on more risk, the tools and technology needed to support its success become more mission critical and must be more robust. In addition to day-to-day analytics, an Accountable Care Organization's technology base must be able to report on federal, state, and commercial metrics such as the Medicare Shared Savings Program (MSSP). Having a solution like McKesson Population Manager that provides the core tools needed for where you are today and the capacity to expand as your risk management needs evolve is essential.

Next: Overseeing care management programs