Quality Over Quantity: Accountable care organizations link physician payments to hospital outcomes

Among the pilot projects already planned, health care officials at Robert Wood Johnson are hoping to create an academic health center-related ACO to link the disparate elements of health care delivery across a large swath. “Our vision is really to build the finest 21st-century integrated delivery system for New Jersey,” Dr. Tallia says. “And that would include everything from advanced, personalized in-home and outpatient primary care to high-tech, leading-edge inpatient quaternary care—and everything in between.”

Virginia’s Carilion Clinic was the first to announce its participation in a separate pilot involving the Engelberg Center for Health Care Reform at the Brookings Institution in Washington, D.C., and the Dartmouth Institute for Health Policy and Clinical Practice in Lebanon, N.H. Both institutions have been heavyweights in championing the ACO cause. Dr. Werner says Carilion actually began transforming itself into a more coordinated and integrated organization about three years ago, well before the current ACO buzz began. “We always said from the beginning that we were creating an accountable physicians group, where the physician group had accountability for all of the outcomes important in health care,” he says.

The Nitty-Gritty

So how would such organizations actually work? Dr. Tallia sees three absolutes: local accountability, shared savings and performance measurements. Beyond those necessities, the details begin to blur. The bad taste left by the widely despised capitation payment systems of the 1980s and ’90s has made experts wary of dwelling on the similarities between ACOs and fixed, prepaid capitation plans. Any mention of the C-word, in fact, is followed almost immediately by a caveat: This is a flexible, big-tent strategy that avoids any one-size-fits-all payment prescriptions. And most advocates are emphasizing that ACOs should be voluntary.

Analyses have suggested that in order to succeed, an ACO should enroll 5,000 or more Medicare beneficiaries, or at least 15,000 privately insured patients. Which combination of patients and providers should be included has been left vague to allow emerging networks to tailor the model to their own needs. Some experts differ as to whether hospitals are a necessary component, though almost all agree on the need to include primary care providers.

Dr. Tallia envisions his medical school-based linkup as a marriage between New Jersey’s largest multispecialty medical network, the Robert Wood Johnson Medical Group, and the 30 percent to 40 percent of primary care practices in the state that already have relationships with the school. “If you marry the primary care relationships to the subspecialty care in the Robert Wood Johnson Medical Group and then tie in the area hospitals, by golly, you’ve got an ACO,” he says.