The new health models being used in the US are similar to those coming to Britain: the aim is to cut costs while improving the service, says Mark Zezza
Among all the health reform activities in the United States, the arrival of accountable care organisations is considered one of the more promising for bending the health care cost curve while improving patient outcomes.
Accountable care organisations are providers that are held accountable for the cost and quality of care for a defined population of patients. The successful ones are expected to manage costs by aligning incentives for hospitals, physicians and other providers to encourage better co-ordination and to promote continuous quality improvement efforts. Those that are able to keep costs below specified amounts can share in the savings, contingent upon meeting performance standards.
The organisational model is still relatively new and untested. In fact, the results for the Medicare physician group practice demonstration, one of the largest such efforts to date, has been mixed at best: only half of the 10 participants have achieved cost-reduction targets by the end of the fifth year.
However, providers and payers remain committed to the concept. Over the next year, the number is expected to grow substantially, as a new Medicare programme designed specifically for accountable care organisations is set to begin in April. Interestingly, the model bears a strong resemblance to the basis of proposed reforms being introduced in the NHS in the United Kingdom – ie, the clinical commissioning groups. These will also be provider-led and be responsible for managing the health of a defined population of patients under a budget.
At the recent Nuffield Trust Summit, I had the chance to meet several NHS delegates and other UK stakeholders. Three key issues were raised, which I have outlined in more detail below.
Flexibility in design
A key feature of the accountable care organisations framework is its inherent flexibility. For example, participating provider organisations can range from integrated delivery systems to loosely affiliated physician groups that may be linked together through a regional health information exchange.
In addition, payment models can range from one-sided approaches that reward providers for reducing costs, but do not hold them at risk of any excess costs, to two-sided approaches, in which providers can achieve even larger rewards, but are held accountable for excess costs.
Since the US programme is voluntary, this flexibility can help encourage broad participation. However, too low a barrier for entry could lead to the enrolment of providers not ready to co-ordinate and manage care effectively, potentially resulting in wasted investments.
One suggested cost-reduction strategy is to avoid high-cost hospital services. However, those services represent revenue to hospitals, which calls into question the value proposition for a hospital to participate in the new model.
On the other hand, hospitals can be considered logical leaders for the new model organisations. For example, they already have a management structure and are likely to have a data sharing infrastructure in place, as well as the capital available for the upfront investments needed.
In addition, hospitals may be motivated to protect their market share, realising that change may be inevitable as current payment rates are unsustainable and physician groups and competing hospitals may already be getting a head start in reform efforts.
The new organisational model does not require any insurance benefit design changes. For example, patients assigned to an ACO under the Medicare program would still have access to other Medicare providers. While this helps ensure that patients retain choice, it also makes it harder for ACOs to manage the care of their patients. Ideally, they will retain their patients by providing high-quality care associated with positive patient experiences.
As can be gathered from this sampling of issues, the new model is certainly not a sure fix to the problems in the United States health care system. It represents a sharp change from the current health care environment in which most providers are not well-equipped to co-ordinate care and have little financial incentive to do so because of the predominant fee-for-service payment system which rewards inefficiency by paying more for more care, regardless of the impact on patient health.
Thus, it would likely take years and many modifications from lessons learned, to foster the type of change that can permanently bend the cost curve. Given that similar issues are being faced by the NHS, ideally that process can be accelerated by sharing lessons learned across health systems on both sides of the Atlantic.
Dr Mark Zezza is a senior policy analyst at The Commonwealth Fund in the United States. He presented at the Nuffield Trust's Health Policy Summit 2012. Guardian Professional.