By Gregg A. Masters, MPH
Timing can be everything at times, no?
Just after completing the post: ‘From “Unicorns to Multicorns” ACOs Morphing Below Radar‘, I received information from Oliver Wyman, a Marsh McLennan Company, previewing a study which documents (at least for some) ‘unexpected’ results in the world of ACO penetration.
For background market scaling or ‘ACO virality’ context, be mindful we had a bit of an energetic but collegial exchange between HMO industry veteran William DeMarco and noted healthcare futurist Jeff Goldsmith. DeMarco was opining on the prevalence of ACOs et sequelae, while Goldsmith ridiculed DeMarco’s referenced math via the post ACO Explosion, carried forward into ‘Are Hospital Business Models on a Burning Platform? Not Yet, But It’s Inevitable’ by Vince Kuraitis at the Healthcare Blog. DeMarco notes that:
….20% of Medicare beneficiaries…will be connected to Medicare through their ACO by 1.1.13..’
[add] Medicare Advantage beneficiaries [27%]…a factual statement…[and ACO share will approach] 50% of Medicare population.’
To wit, Goldsmith skeptically retorts:
The Medicare ACO program “covers” less than 5% of Medicare beneficiaries, and a tiny fraction of it will actually resemble full risk. There is simply no evidence of momentum toward risk-sharing with hospitals in the current payment stream. Medicare Advantage is growing at 10% a year, but most of the hospital contracts are not shifting risk to hospitals. DeMarco’s forecast is laughable.
Now add to this thread data from the Oliver Wyman Group (aka @OliverWyman) structured inquiry. (Editor’s note: Marsh McLennan is not a newcomer to the healthcare risk, actuarial, underwriting or consulting broker universe. Progenitors of InterQual’s the ‘Potentially Compensable Event’ hospital survey commercially morphed into the ‘generic screening criteria’ for the Intensity of Service/Severity of Illness data set, they could be arguably considered one of, if not the principal founders of the clinical risk management or quality assurance industry. Take away: listen to what they have to say, tweeps!).
In just two years, a new model of healthcare captures 10 percent of the market.
The healthcare world has only gotten serious about accountable care organizations in the past two years, but it is already clear that they are well positioned to provide a serious competitive threat to traditional fee-for-service medicine. In “The ACO Surprise”, our analysis finds that 25 to 31 million Americans already receive their care through ACOs—and roughly 45 percent of the population live in regions served by at least one ACO. While relatively few organizations have achieved the full potential of the model, the top performers are already generating savings and delivering improved care.
For the complete Oliver Wyman report, click here.
Man, things are really starting to get interesting!
acowatch.me 
1) Jan 1, 2013 is not that far away and we will know where the humor lays.
2) It really is a tipping point discussion and the physicians in the ACO will have something other than a “do more-get more” model of compensation at a high enough level that it may make a difference in their behavior. You don’t have to eliminate all that much utilization to result in a number of providers/hospitals/imaging centers, etc become unsustainable.
Hi Mike: Indeed, the tipping point is [finally?] here. The transition will most likely arrive via a combination of efforts creatively designed to navigate the schizophrenic break from a fee-for-services addiction. For some this will be easier than others. Managing the transition will require considerable skill and vision.
Thanks for your comment!
The Oliver Wyman report offers further support of our belief that private ACOs that are started by health systems and insurers touch many more people than just those enrolled. The ACO treatement process will impact 14 million non Medicare and we estimated some 40 to 50% of Medicare eligible.
This is phenomenal growth and has caught the attention of wall street as well as the vendor community wondering where they would fit the this new business model.
Pharma companies estimate that over 50% of thier sales will be in the Speciliaty Pharma area by 2014, they need to be commiteed to contracting with ACOs or funing them as DeVita has., Lab companies also need to be ahead of thier market to make sure they are part of the mix in the expansion of ACOs.
Time will tell as to whether all of these shall survive but right now if your not in the market by 2013 for a 2014 start you probably are poorly position as a ‘me too’.
No one wants to see the unaccoutable provider group.
WJDeMarco
Thanks Bill! I’m with you my friend.
Way too much rigidity (perhaps naiveté?) when sensing and forecasting the likely proliferation of ‘certified’ ACOs, ‘accountable care collaborations’, or their derivative forms. If one lens is solely a CMS prism, then I can see why one could draw the low penetration and tepid market impact conclusion. But as JD Kleinke points out: ‘there really aren’t 2,000 pages in the Affordable Care Act, it’s actually 906, I’ve read everyone of them…’ (paraphrased). Just think there may be more purposeful ‘brilliance’ in the bridge (some may say “Rabbit Hole”) the Act builds via its component program and innovation tapestry.
I think we’re witnessing an explosion. Those caught with their ‘me too’ pants down will simply lag and in some cases whittle away as relevant players in their respective markets.
p.s. I’me waiting for the venture funded equivalent of ‘ACOcor’ if you know what I mean.