Hospitals and health care providers that are deliberating on transitioning to value-based payments must cut through the noise to fully understand the benefits of Accountable Care Organization (ACO) participation.

It’s true – participating in an ACO is hard work. While the popularity of ACOs is growing, many are just realizing the importance of connecting the potential savings to the change management needed to thrive.

But that doesn’t mean accountable care doesn’t work.

Our proven methodology shows that an ACO model is the best pathway for clinical and financial success. Participants can successfully transform their organizations to achieve the high-quality scores, improved workflows, and lowered costs that will keep their health system sustainable.

It’s time to squash the misconceptions about ACO participation so that all health care systems can truly reap the benefits of population health. We’ve identified the top six myths about ACOs:

Myth 1: Change is too difficult to manage.

Getting staff on board is difficult, but not impossible. Caravan Health’s belief is that change happens at the practice level, so that’s where we begin. A practice can’t jump into an ACO and expect systems to be in place. It takes ongoing commitment from all levels of an organization.

We’ve found that open communication goes a long way. Monthly steering committee meetings and quarterly board meetings are ample opportunities to bring issues to the forefront. This creates alignment between hospitals and physicians, allowing an open forum to reinforce new ideas and solutions.

Myth 2: More responsibilities for physicians.

Population health initiatives won’t work if your physicians are burnt out. It’s time for physicians to be relieved from their administrative burdens so that they have more time to focus on their patients.

Caravan’s team-based care approach empowers nurses to lead wellness and prevention initiatives. By taking advantage of incident-to billing, practices will still get paid for the work nurses do, while their quality of patient care and physician satisfaction sky rockets.

Myth 3: Hospitals and providers can’t remain independent and ACOs are just a vehicle for consolidation.

Under an ACO, hospitals and providers can avoid consolidating and continue to operate independently. We focus on individual accountability, to ensure all participants are doing their part. Health care decisions stay local and practices get paid for the work that they do. Research shows that ACOs are not leading to industry consolidation.

Some of Caravan’s top performing organizations include rural and community hospitals that are exceeding benchmarks. An ACO breathes new air into their systems, giving them the financial sustainability to stay ahead of their competitors. 

Myth 4: ACOs can survive with 10,000 lives.

Based on historical data, ACOs with less than 100,000 lives will show wide swings in performance. Through Caravan’s experience in managing ACOs, organizations must have at least 100,000 lives to avoid statistical variance in savings.

The fact is, 80 percent of ACOs are too small to survive. As ACOs are forced to take downside risk, Executive Directors will face uncertainty in achieving shared savings to remain sustainable.

Myth 5: Hospitals can’t run successful ACOs.

Some vendors claim that only physician-led ACOs that exclude hospitals can manage costs effectively by keeping patients out of the hospital. Hospitals, the argument goes, won’t make any changes to better manage patient care because the hospital might lose admissions.

Our view is that all ACOs are physician-led. Our ACOs feature true collaboration between hospitals and physicians. Hospitals are well-suited to convene clinicians in a community and change care quickly, working hand-in-hand with local physician leadership. Growth in inpatient services has been slowing for decades – Caravan Health ACOs have been able to offset that trend through growth in outpatient services and revenue Hospitals also bring deep experience with the key actors in population health, empowered nurses.

Myth 6: ACOs are organized to put hospitals out of business.

Many hospital CFOs believe that ACOs are designed to reduce hospital admissions and eventually to put hospitals out of business entirely.

The reality is that hospitals are far more at risk if they don’t take population health seriously. Payers are demanding accountability for the total cost of care, and are increasingly requiring use of risk-bearing contracts. The good news: hospitals running successful ACOs can reduce the growth of health care costs and still maintain a growing business. Medicare spending, driven by rapid growth in the number of Medicare beneficiaries, is slated to grow by 5 percent each year for the next decade. ACOs need only reduce spending below this growth rate, on average, to succeed and achieve shared savings. A four percent growth rate with the opportunity to earn part of $350 billion in shared savings is a viable business that can also produce better health outcomes for patients.  

Medicare spending is projected to grow by 5% annually over the next ten years. A 1 percent per year reduction would produce 4% Medicare spending growth and generate $700 billion in savings for Medicare, and $350 billion of that could be returned to ACO participants

Addressing these misconceptions shows that every hospital and provider can thrive by joining an ACO. Caravan’s proven ACO model has helped hundreds of hospitals overcome barriers to achieve population health success.

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