Five ACO success tips from Beth Israel Deaconess Care Organization CEO

According to a recent survey, accountable care organizations (ACOs) now serve more than 32 million patients across the country. While ACOs continue to grow and enable the delivery of high-quality care at a more affordable cost, making the transition to risk-based payment models remains a challenge for many providers.

Following are five considerations to help ACOs achieve success:

1. Look for quick wins

The shift to value-based care is a marathon, not a sprint. Transformation takes time, but that doesn’t mean you have an unlimited window to make measureable progress. Establishing quick, early wins is essential for building momentum and driving change.

How we accomplished this:

For Beth Israel Deaconess Care Organization (BIDCO), our first priority was to build a solid IT infrastructure that let us reliably exchange information across our diverse network of providers. This in turn allowed us to arm providers with analytics that help them make better care decisions and meet various quality measures within our value-based reimbursement contracts.

2. Resist the tendency to find solutions within your current paradigm

Hospital executives and physicians moving into risk-based agreements must recognize that old habits will not produce new tricks. In other words, the way they've always done business won’t necessarily lead to success in risk contracts. Risk contracts require a shift in tradition mindsets. However, people, by nature, are resistant to change. What we know comes from our experiences and it can be hard to see new perspectives.

How we accomplished this:

My advice for ACOs is to solicit opinions and advice from a wide-range of stakeholders, including individuals and organizations outside the healthcare industry. The best ideas often come from those not wedded to the way things have always been done. Opening your mind to fresh voices and creative solutions is a critical puzzle piece.

3. Add a dose of competition: Make performance transparent

During my first two years at BIDCO, we were careful to only show blinded performance data to protect the identities of our providers. We learned the problem with this approach was that no one took responsibility for being at the bottom of the pack. It wasn’t that our providers were indifferent, of course. Rather, and simply, no one identified their performance as below average since everyone was working hard to care for their patients.

How we accomplished this:

We lifted the information veil and the result was amazing. Transparency led to increased competition and collaboration of best-practices among our physicians and hospitals, which drove behavior change and ultimately improved patient care.

Providers are data-driven and competitive-share unblinded performance data and benchmarks and watch transformation unfold.

Next: Recognize the flaws of risk adjustment

4. Recognize the flaws of risk adjustment

It’s possible that we are overvaluing the role of risk adjustment. The reality is risk formulas are inherently flawed. You can have two patients who are the same age, same gender, and have the same diagnosis–and still, even with all things equal, they will have very difference medical expenses. The problem is real-world factors such as marital status, income level, and other socioeconomic and demographic factors are not taken into account during the risk-adjusting process. As it stands, there simply is no perfect correlation between risk scores and total medical expenses, and yet we continue to use risk scores at face value to determine ACO reimbursement rates. This approach creates disconnect between actual costs and predicted expenses.

How we accomplished this:

In order to succeed, ACOs need to develop better algorithms to more accurately predict medical costs, and start to rethink how ACOs get paid in value-based, risk contracts.

5. Rethink incentives and reward systems

Compensation is foundational to accountability, change management, and achievement of overall system goals. So, the importance of incentives and compensation within an ACO should come as no surprise.

How we accomplished this:

At BIDCO, we started with an individualized compensation model in which physicians and hospitals with the best performance received a larger share of the surplus earned from our risk contracts. It was a good approach in the early years, but weakened over time. We later designed a hybrid compensation system that rewards providers based on how the aggregate system performs as well as individual performance. The new system is much more balanced and ensures the full provider network is working toward achieving shared goals.

ACOs are constantly challenged to find innovative ways to be more effective and efficient-some challenges will propel you forward while others may test your stamina. And just when you achieve one level of success, the goal post will undoubtedly move again. Don’t get discouraged. We are transforming an industry, and that takes time.

Jeffrey Hulburt is the president and CEO of Beth Israel Deaconess Care Organization, a value-based physician and hospital network and an Accountable Care Organization in Massachusetts.