ACO or vACe aka virtual Accountable Care enterprise?

By Gregg A. Masters, MPH (inspired by Vince Kuraitis)

e/n/t/e/r/p/r/i/s/e/A business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers… The etymology of “business” relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. – WikiPedia

Yesterday I had the pleasure of chatting with Andrew Croshack and Thomas Merrill of Leavitt Partners, aka @LeavittPartners, the consulting firm founded by former Bush Administration Secretary of HHS and EPA Administrator, Michael O. Leavitt. We discussed their recent report ‘Growth and Dispersion of Accountable Care Organizations‘.

Upon review of the document, and perhaps due to my UCLA forged public health genealogy, I instinctively substituted common epidemiology notions of ‘incidence and prevalence’ v. the growth and dispersion of ACO’s characterization. Not sure why, just an autonomic reponse (thanks professor/dean Detels). I suppose it remains to be seen whether the neo-clinical and underlying public health pathology implied will in fact materialize as de facto business or enterprise equivalents akin to the rise and fall of the physician practice management company industry (PPMC).

None-the-less, Croshaw posits as motivation to conduct the survey the absence of empirical data on the growth of the industry. Their reported results by ‘sponsor’ are summarized as follows:

Of the 164 identified ACOs, the sponsoring entities included hospital systems, physician groups and insurers with a market presence in 41 states but less than half of all HRRs. Of these entities, 99 were primarily sponsored by hospital systems, 38 by physician groups and 27 by insurers.

Yet following a review of their report and our conversation, noted industry observer and talented consultant Vince Kuraitis further opined on their methodology, specifically questioning their omission to distinguish between ACOs and ‘accountable care’ per se. Kuraitis offers the following:

Are the Findings Accurate?

I’ve written before about the critical distinction between “accountable care” and ACOs — they’re not the same thing. If there is one suggestion I would offer the Leavitt researchers, it’s that the next census should better distinguish between formal ACOs and other accountable care-like (AC-Like) activities.

A formal ACO organization is a legal entity formed by care providers — it is incorporated, has a Board, holds meetings, is registered with the Secretary of State.

Informal, AC-Like initiatives can be created through contracts. The parties simply get together and agree to develop an initiative. They might choose to announce or not to announce their initiative publicly. Commercial payers are much more likely to be involved in AC-Like activities — in many cases even leading the charge.

How accurate is the Leavitt census of ACO activity? I can see that it has potential both to overstate and understate accountable care initiatives.

Kudos to both Vince and Andrew et al for kicking off this conversation, and comments are most welcome here and there as well. Yes, there is little empirical data available and for good reasons noted in both narratives. I highly recommend you read both the Leavitt Partners report, and Vince’s follow-up thoughts to further develop your own perspective.


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  1. Aw, shucks Gregg, thanks for your kind words. I cannot much take credit here as many other commentators are observing the distinction between the Medicare version of ACOs (requiring the formal ACO organization) and the commercial payer version of accountable care initiatives (which can easily be done through contracts).

    We will continue to see many flavors and shades of accountable care. We live in interesting times.


  2. I like the idea of this report. I don’t really know what type of organizations were included (a list would be nice), but my understanding is that these are not necessarily legal ACO structures ala CMS.
    I agree with Vince that there are probably many more smaller scale experiments out there, but I don’t know how much actual risk is being shared. For that matter, I’m not quite sure how a payer can create an ACO, since the payer carries the risk anyway. Perhaps a payer can have a contractual relationship with a group of providers that agrees to take risk, but wouldn’t that make the providers an ACO all by themselves?
    And speaking of risk, I am a little uncomfortable with providers taking risk, both because small practices are ill suited to assume risk for hospitalizations, and because in my opinion, it will be extremely difficult to allocate risk, and savings for that matter, amongst independent providers of various types and sizes, which, if this trend really catches on, and it looks like it is already, will only hasten the demise of independent practice in favor of big medicine.

    I do like the virtual concept better, but it is not a simple thing to accomplish either. How would you create an ACO structure with, say, 20 solo PC practices, one medium size hospital and a couple of multi-specialty groups? I have no idea, but I’m trying to explore some alternatives in an upcoming blog post… I am not very hopeful.

    1. Thanks Margalit!

      All real time concerns duly noted, as they were back in the 80s and 90s with respect to global (including institutional/hospital), vs. full or partial professional risk contracting, and the capacity for an IPA/Medical Group or even PHO/health system to absorb/endure ‘adverse selection. Don’t think we’re quite there yet in the ACO narrative. My sense is the virtual world of contractual arrangements untethered to CMS rules specific to the certification of ACOs will be the source of most market specific innovation.

      Yet this is within the purview of what the CMMI can encourage via experimentation with different provider side models including multi-payor arrangements. One missed strategic opportunity of the 90s was the failure to adopt a ‘payor neutral’ mission and thereby focus on ways to become a more effective managed delivery system partner to the major payers in their markets; vs competing directly via a branded insurance presence. Had the focus been on defining what it meant to be a better provider side partner to payers to mutually market and manage the risk assumed via the ‘joint portfolio’ we might have found ourselves in a better position that we do today.

      Trust whether between physicians and hospitals and then add the payer or employer to that conversation as well remains a keep stumbling block, imj. We haven’t progressed much passed the ‘my expenses are your revenues’ claim.

      Thanks for the thoughtful reply!

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