Five Ways to Lead an ACO to Failure

February 23, 2015
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aco mistakesOver the past few years, I have had the opportunity to talk to and learn from many accountable care organization (ACO) leaders.

aco mistakesOver the past few years, I have had the opportunity to talk to and learn from many accountable care organization (ACO) leaders. Creating an ACO in a health system or network requires new organizational structures, new IT capabilities and most importantly, new leadership skills.  When I see ACOs struggle to achieve anticipated quality improvements or cost savings, I know that their leaders have most likely made a few poor choices in their initial decision-making. With the benefit of hindsight, here are five mistakes that experienced, successful leaders tend to avoid.  Make sure not to:

  1. Place the entire burden of success on the shoulders of individual practicing physicians.  It is essential that leaders educate individual physicians about your ACO’s values, goals and programs, but execution success requires a team approach.  The burden of the day-to-day work of identifying and closing gaps in care, or of providing intensive care management, should be managed by the care team.  The physician should provide clinical direction, support care processes, and embrace value-based care concepts. At the same time, members of the care team should be empowered with protocols and processes to operate at the top of their licenses in order to complete any task that doesn’t require direct physician intervention.
  2. Ignore the complexities of data acquisition. Data is the lifeblood of successful programs. The data required to understand where to focus management programs in your ACO comes from a myriad of potential sources, including numerous individual practices, payers and inpatient and post-acute facilities. The state of healthcare today makes it virtually impossible to include every bit of available data in your healthcare analytics. However, an experienced leader will take a pragmatic but aggressive approach to identifying the most meaningful sources of data. A good leader will invest in the infrastructure and staff required to obtain and manipulate the data in order to produce meaningful analytics.
  3. Neglect to solicit the support of other leaders. Until an organization provides 100% of its care in an ACO or capitated model, there will always be tension between volume and value. For example, an ACO leader may implement a highly effective program to minimize the use of advanced imaging for back pain.  While this advancement will improve ACO contract performance, it will also result in greatly decreased utilization of MRI machines, causing financial challenges for another part of the organization.  Strong leaders understand this tension, and work closely with their colleagues to achieve alignment and optimize the system’s overall financial outcomes during the challenging transition from fee for service to value-based care.
  4.  Underestimate the difficulty of ACO success. Only 25% of CMS Medicare Shared Savings Program (MSSP) ACOs earned shared savings in their first year. I suspect that a number of the ACOs were under the impression that earning these savings would be easy. Perhaps a consultant helped them complete the application, and then the leaders simply thought they could sign up a bunch of physicians and review some basic analytics about gaps in care and utilization. In year two, many of those organizations will realize what the seasoned leaders already know. Success requires a fundamental change to the care delivery model, and the only way to see sustained success is to realign how care is provided across the system to support value, not volume.
  5. Under-invest in support staff. Finding capital to support the up-front infrastructure costs of an ACO remains a difficult challenge. At the same time that the organization is looking to cut costs, the ACO leader is asking for investments in staff and IT tools. ACOs cannot succeed by operating blindly.  The necessary clinical and financial insights can only be achieved with appropriate investments in IT and the necessary analytic support staff.  In addition, capital is needed to support the leadership and staff in their effort to design and implement practice transformation, new care models, and care management programs.

Successful leadership of an ACO is a challenge — even for an experienced leader. The topics discussed here represent only a fraction of the decisions ACO leaders have to make.

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