Are ACOs Just HMOs in Disguise?

When we talk about Accountable Care Organizations (ACOs) , a lot of people think that they are nothing more than a second try at the ol’ Health Maintenance Organizations (HMOs) of the late 80s. ACOs may have some things in common with HMOs, but when you look a little bit closer you’ll see that there are a few very distinct elements that differentiate them.

When we talk about Accountable Care Organizations (ACOs) , a lot of people think that they are nothing more than a second try at the ol’ Health Maintenance Organizations (HMOs) of the late 80s. ACOs may have some things in common with HMOs, but when you look a little bit closer you’ll see that there are a few very distinct elements that differentiate them.

1. ACOs are inclusive of patient satisfaction and quality; it’s not just about money.

Even though it’s true that healthcare is certainly heavily focused on reducing costs these days, ACOs are striving to achieve lower costs without compromising quality. It would certainly be easy enough to just provide subpar care that costs less, but it wouldn’t be what is best for patients and communities. The goal, therefore, is to create more services rather than less, but services that are focused on promoting health.

2. ACOs are smaller, more focused and more individualized.

Unlike HMOs, which were big, broad and run by large bureaucracies, ACOs are actually designed to be more manageable and suited to smaller, more intimate settings. Individual hospitals, of course, are still part of a larger infrastructure and are not completely immune from their needs – but, they are able to stay local.

3. With ACOs, you’ll start seeing the benefits right away.

HMOs promised that eventually things would improve, and it was often difficult to keep morale up while waiting to see if things were going to get better. With ACOs, since the goal is to actually promote health, the benefits will be seen right away and the incentives are much more readily visible to those who work with patients, or who review financial data. When patients and communities are healthier, they will not have high utilization of costly services, and the cost of preventative care will be greatly less than the high utilization services such as emergency rooms.

4. Physicians are more receptive.

Before, physicians were working in silos – small groups or practices that weren’t interested in collaboration. Because of this, there was far less integration and cost-sharing. Nowadays, physicians are more willing to consider integration. In fact, with physician groups becoming more and more the norm, freshly minted physicians can look forward to more employment opportunities right after graduation than in years past.

5. With ACOs, there’s more than one way to pay.

There’s a strong fee-for-service component with ACOs that was very absent from previous HMO models. For physicians, it’s far more intuitive to use a fee-for-performance model because they would expect to be paid based on the quality of their work and how much work they can do – not some seemingly arbitrary set rate that doesn’t reward them for a job well done. When you also factor in, that with ACOs, there will be cost savings, the financial incentives are many.

6. Healthcare IT is changing the game.

Back when HMOs ran the roost, healthcare didn’t have access to the information technology that we have now – and that we’re currently developing. Not only does it change the way patient care is delivered, but it also has greatly influenced how we use technology to assist us in the finances of healthcare. Furthermore, this technology can help us to look at trends over time and actually use the information that we have gathered to help us make predictions and to better understand how our workflows are being affected. This type of longitudinal data analysis simply didn’t exist in the days of managed care.

Even though on the surface it would appear that there are some meaningful similarities between ACOs and HMOs, the truth is, HMOs won’t survive in today’s healthcare climate – but the evolution of ACOs will, and it will lead healthcare to a transformation and focal shift that it desperately needs. ACOs reward physicians for their ability not only to treat their patients, but to coordinate their care with other physicians and services – creating a much more integrated and interdependent healthcare environment. The togetherness of ACOs will hopefully continue to foster confidence and prevent us for slipping back into the operational silos we became comfortable in in the days of HMOs.