by: Wayne Webster

The Accountable Care Organization (ACO) is a part of the enacted legislation of March, 2010 known as the Patient Protection and Affordable Care Act (Obama Care). The intent of the ACO is to streamline the delivery of care and reduce costs through the application of quality systems and measurements including the adoption of electronic health records (EHR). Unlike its managed care predecessors, the HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization) the ACO is not an organization for patients to join; rather, it is for providers, hospitals, clinics, and doctors to join.

It’s estimated that the cost of forming an ACO may be as much as $30 million. With this type of investment the most likely formers of ACOs will be large institutions like hospitals. This appears to be what is happening throughout the U.S. Large hospitals are forming ACOs and in the process acquiring other hospitals, free standing clinics and physician practices.

To make the formation of the ACO palatable Medicare and other third party payers are providing cash incentives (Stimulus Payments/Rewards) to ACOs for implementing quality measures, EHR, improving quality of care, reducing duplicative procedures and the big one, reducing the cost of care. These rewards are driving physicians to reduce their costs by reducing the number of tests and procedures ordered.

The creators of the ACO believe with quality systems measurement and the application of EHR the data provided to the ACO will naturally result in reductions in the cost of health care spending. Maybe in five years or more this data mining may prove to be a way to understand diagnostics and how to cost effectively apply diagnostic procedures. In my opinion, the earliest reductions in ACO health care spending will come initially at the expense of costly procedures like medical imaging and there won’t be much need for health care metrics to truncate the application of diagnostic imaging.

Imaging procedures, the so called “COSTLY” procedures are being reduced today by:

  • Motivating the physician financially to forego ordering tests
  • Reducing the reimbursement year to year
  • Hospital acquisition of imaging centers and physician practices

Although the ACO will be rewarded for implementing quality measures the ultimate savings will come from eliminating procedures in what is being called an “inefficient delivery of healthcare”. The best way for the ACO to be paid more is to do less. For imaging utilization the growth of ACOs and the corresponding growth in influence of the hospital as providers of imaging services will most likely result in two outcomes:

  • An increase in the length time for the equipment acquisition cycle
  • A decrease in the number of diagnostic imaging tests ordered

Is this a good result for the general public? Time will tell. Is this a good outcome for sellers and servicers of new and used equipment? I think the paradigm in which we operate is changing rapidly. Those able to adapt organizations and offerings will prosper.  Others will find it increasingly more difficult to compete.