Accountable Care Organizations:

“The Reports of our Failures are Premature, and

Those of our Successes are Exaggerated.”

The Affordable Care Act (ACA, “ObamaCare”) made legal an arrangement that had previously been discouraged by the Department of Justice, i.e. collaboration by hospitals, doctors and others to reduce healthcare costs and share the savings.  These Accountable Care Organizations (ACO’s) must have contractual and structural details approved by the Department of Health and Human Services (HHS) before they can begin operating.

The 300 or so approved ACO’s are pretty fresh out of the can, but already there are reports contending that they either are or are not successful in reducing costs for their patient populations.

I suggest everyone sit down and take a deep breath.  Most of the effort so far has been in organizing the ACO’s, funding them, and obtaining HHS approval.  That will not produce a high efficiency operation any more than seating 40 men in a locker room will make them a credible football team.

Contracts and financial arrangements do not change behavior and practice; they create the incentives to change.  Substantive change requires effort, time, and information, and it will not be accomplished by ordering matching lab coats.

In one of my former hospitals, we had a pre-ACO corporate program to reduce costs for in-patients.  The effort was targeted at DRG’s with out-of-line costs and supported with data in a level of detail never before available to us.  Multi-disciplinary teams were created to bring the right content experts to each of the DRG initiatives.  The COO and I were project leaders for our hospital, and at our kickoff meeting I told two stories, both of which I believe to be true, but only one of which I can affirm with independent reports.

During the First World War, wrist watches supplanted pocket watches as the timepiece of choice for men.  Nevertheless, military uniforms continued to be made with watch pockets in the trousers.  After the armistice, the War Department solicited cost-saving suggestions from its personnel, and one soldier recommended eliminating those pockets.  When WWII came along, the millions of uniforms produced without watch pockets resulted in substantial savings.

More recently, the Department of Defense asked its personnel how combat uniforms could be improved.  The current uniform pockets were secured with Velcro.  The soldiers reported that the Velcro attracted dirt and sand, becoming less secure and opening, say an ammo pocket, made noise that might help the bad guys locate the good guys.  The Velcro closures have been replaced with traditional snaps, which not only work better but are also cheaper.

“We are looking for watch pockets and Velcro,” I said to our co-workers.  The idea is to improve service to patients while eliminating costs that either do not contribute to that service or might even diminish its value, a variant of “lean thinking”.

First we had to learn how to use the data bases provided us, and we also recruited team leaders who could develop and harness the various talents represented on their teams.

This is a learned skill, and it took time for the teams to jell.  Brainstorming, experimentation, and re-working require latitude and patience.  Senior leadership must temper its sense of urgency with that understanding.

So also with ACO’s.  The concept is attractive, but concept alone will not carry the day, no more than merely visualizing a golf shot will put the ball in the hole.  Some ACO’s will experience more initial success than others.  What we need is that all ACO’s will be “learning organizations”, as characterized by Institute of Medicine (“Best Care at Lower Cost”, 2012).  Progress will be incremental and sustainable, and our healthcare system will take its place among those that are both more effective and more efficient.