White Papers

Hospitals: Are You Ready for an ACO?

ACOs aims to change the way hospitals deliver care by changing the financial incentives involved with providing care. There are different payment structures that can be used to encourage hospitals to lower costs, improve quality, or both. Since the goal of an ACO should be to lower costs and improve quality, using an accountability payment structure—one in which costs and quality are linked—will be the most effective.

For most hospitals and health systems, appropriately synchronizing changes in payment incentives with the clinical model will prove a tall task. The pacing and sequencing of investment and change must be very carefully managed to ensure the financial sustainability of innovation. Accepting more payment change without sufficient clinical innovation leads to underperformance against new clinical and financial measures of success. The opposite is equally true: changing a care model without a revenue model to capture the value created promises to improve someone’s bottom line, just not the hospital.

What is a hospital or health system to do? First, begin evaluating internally, focusing on ways to optimize care efficiency and cost control within the acute care walls of the hospital, and then extending the care continuum within the post acute care market place. The advantages to this approach are as follows. First, improvements within traditional acute care operations address the performance risks all hospitals face. Second, improvements that directly benefit hospital finances can expand capabilities to manage utilization risk in the post-acute care realm down the line.

In discussing ACOs and hospitals, this white paper includes:

  • A survey of hospitals and hospital systems about ACOs
  • ACOs and measurement
  • How ACO measurement requirements affects hospitals
  • ACO questions hospitals need to consider

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