HCI3 Update from the Field: An Academic and His ACO

Submitted by francois.debrantes@hci3.org on Friday, January 17, 2014 - 12:18

Newtown, CT – January 17, 2014

"A glooming peace this morning with it brings. The sun, for sorrow, will not show his head. Go hence, to have more talk of these sad things. Some shall be pardoned, and some punishèd. For never was a story of more woe than this of"…

…an academic and his ACO – This doomed love affair has lasted far longer than that of the famed Juliet and her Romeo, and yet they seem to share a common fate. The passion between some academics and ACOs has burned bright and hot. To the outcries of the benefits of clinical integration we heard the echo of ACO…I am here! To the demands of more patient-centered care coupled with efficiencies we heard the echo of the ACO…I am here! To the laments of the wonder days of HMOs we heard the echo of the ACO…I am here! For many of us it always seemed a stretch that big-box health care would be the answer, but the love fest was certainly tough to resist. Recently, however, a couple of daggers were thrust through the hearts of these lovers. Health Affairs published a paper with the results of a survey of orthopedic surgeons in academic medical centers about their understanding of the price of implants. Guess what…they have no idea. They overestimate the price of the inexpensive ones and underestimate the price of expensive ones. And in the Annual Review of Health Care Management, Rob Burns and his colleagues carefully and methodically examine the evidence that big-box health care benefits from any economies of scale or scope. Guess what….it doesn't.

What this means to you – You have to stop and consider these data carefully. If there are few economies of scale or scope to big-box health care, then it makes absolutely no sense to encourage further administrative and legal integration of providers. As presented, the evidence joins other body of work showing that the net result of provider integration is simply higher prices. And given the survey published in Health Affairs, that makes sense. If surgeons systematically underestimate the price of expensive implants, then they're going to continue using them. And clearly, the organization surrounding them isn't doing a particularly good job at creating awareness on the cost of supplies. So is there any evidence that big-box health care – outside the very small handful of exemplars – is delivering better quality care? It doesn't seem that way from the early results of the Medicare ACO program or the recently published rates of readmissions in hospitals around the country. The descriptions of the scale and scope challenges by ACO leaders are highly informative and support the evidence presented by Burns. The big boxes are struggling and none of us should be surprised. Yet, the laments are being heard loudly, for once again the lovers have been foiled. Perhaps we'll finally learn not to get caught up in their foolish passion.