ACO’s as Sinkhole Medicine? Nah…

By Gregg A. Masters, MPH


As the battle for the accountable care narrative grinds on both in the media and the respective P&Ls of participant ACOs, a recent article in Healthcare Finance News titled: Accountable care organizations: cost-effective solutions or financial sinkholes? is noteworthy.  At first I chuckled, then thought, more headline ‘eye porn’ or is there really a message here?

So lets start with the remark that caught my viscera –  the ‘sinkhole’ attribution. The piece is written by Paul Cerrato aka Twitter @plcerrato ‘a healthcare editor and writer for 30 years, publishing extensively in a variety of healthcare and business journals’. Pauls sets context for the sinkhole visual here:

But although the costs of care for all the Pioneer ACOs grew by only 0.3 percent, compared to 0.8 percent for similar Medicare beneficiaries outside the program, the fact remains that only 13 generated shared savings [emphasis mine]. Seven of the Pioneer ACOs have decided to move to other pay for performance programs that involve less financial risk, and two of the participating organizations have decided to leave Medicare accountable care altogether.

Then he tees up the underlying ‘Jerry Maguire‘ strategic question:

Given the uneven financial performance of these pilot ACOs, C-suite executives are no doubt wondering: What secret sauce allows some ACOs to succeed while others fall short of their financial goals?

While acknowledging the increased risk exposure to the Pioneers:

Any risk benefit analysis should keep in mind that ACOs come in many different sizes and shapes, and given that the Pioneer ACO model is riskier than the standard Medicare Shared Savings Program, it would not be fair to conclude that the ACO model is flawed, per se.

So digging a little deeper into Paul’s narrative, it’s not about the ACO model. The sinkhole remark is really about the de minimis cost impact associated with the performance of the Pioneer class. Yet, in defense of ACOs and the ACA (a position I am often in) we need take into account the key question of:

ACOs as sinkholes, compared to what? 

ACOs are proactive on a number of levels. Whether a statutory MSSP, or a pilot or demo via CMMI or a private mutation via the ‘ACO collaborations’ of Aetna, United, Humana or the Blues, they are something other than ‘biz as usual’. Anything less is the unrestrained appetite of the healthcare borg, i.e., a business as usual strategy. Bottom line is the current paradigm of healthcare costs, coverage and access is the SINKHOLE with or without an ‘ACO contribution’.

The article is worth a read since it points to both ‘culture’ and the ‘long term investment’ ACOs will require before generating an economic ROI. Unfortunately, tell that to CMS, as they are measuring two pillars of the triple aim (experience & quality), but the driver in the equation is fundamentally the third pillar – per capita savings at the population level.




Join the Conversation


  1. Successful ACO initiatives require change. Just having an ACO business model does not lead to success. It takes a willingness to change the way care is delivered and to be accountable for the population you are risk for. Motivating change in your organization to allow clinicians to care for the health of the patient and not their sickness is a mindset shift. Traditional activity that generates billing activity needs to end and taking a moment to focus on the individual will lead to lower overall costs in a team-to-patient approach. How to afford this change? It takes vision and investment to change the care team into one that can approach segments of the patient panel (population) in ways that are specific to their chronic conditions or lack of them. Year 1 may be an investment while the actions lead to more health aware care and patients who get more engaged in their health. Get people aware of care options outside the ER and before they would elect care in the ER. Manage out of network activity. Distribute care to locations and time of need. Encourage accountability. Listen to the care providers about how to create an effective balance. Enforce data entry and bill at the right level, not the same level. Manage your generic Rx ratios. Contract more effectively with payer and employers. Ask companies like Verisk Health for help. Measure, measure, report, share the data, and measure again. Now you’re getting much better than average financial results. Be courageous!

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