Health Law Is Reforming System Via Market Forces

All the controversial rhetoric about the new health reform law is missing a huge reality:  The law is driving dramatic changes in the real world.  Almost every major health delivery system is preparing to reorganize how they provide care to hundreds of millions of Americans by becoming Accountable Care Organizations (ACOs).

Health Systems are Voting With Their Wallets
The magnitude and level of financial interest in ACOs – and proof that it is not just cautious planning – were dramatically illuminated by recent actions and a Washington Post article:

  • On Thursday, HHS released the long anticipated proposed rule for ACOs and Medicare “Shared Savings.” For the rest of the day the Federal Register’s website was nearly shut down by people trying to download the 429 page document.
  • Today’s Washington Post article, “Complicated health-care law leads to payday for consultants,” includes figures about the tens of thousands of dollars consultants are charging for strategy sessions about how to think about ACOs, and the millions of dollars in fees they are getting for actually helping health systems to become ACOs. Health systems were signing consultants up for these engagements before the draft regulations were released because of their expectations of how dramatically competition among ACOs will change their financial incentives and structures. And some of the phrases in the article highlight the level of importance being placed on ACOs: “ACO frenzy,” “Oversubscribed,” “Glittering high fees” and, “I have never seen anything quite like this in my 35 years in this business.”

Bottom Line
I could write more about the proposed ACO rule, my interactions with health systems looking to become ACOs (and the organizations helping them), and how ACOs will very likely produce significantly more savings for Medicare than the Congressional Budget Office has projected, but the bottom line looks like this:

  • ACOs are happening.
  • The Medicare ACO/Shared Savings rule will shape their form, but not their creation.
  • ACOs – and their quality/efficiency incentives payments – will fundamentally transform health care in the US.
  • This transformation will be like an avalanche as health systems compete locally to demonstrate how much more Accountable they are to patients and payers, i.e. how they provide higher quality at lower costs than their competitors down the street or across the river.
  • While the official title of the new health law is the “Affordable Care Act,” it very easily – and perhaps more accurately – should have been called the “Accountable Care Act” because it is that part of the law which will actually lead to more affordable care for more people.

As always, stay tuned and keep your seat belts tightly fastened for the upcoming wild ride. Like a roller-coaster, the fun is just beginning.

Roller Coaster

4 thoughts on “Health Law Is Reforming System Via Market Forces

  1. There are other ways health care can cut costs without forgetting about the patients they serve. Granted, sometimes healthcare is a matter of proximity, but I think it’s good for health care providers to be forced to provide the best product possible. With the improvements and advances in technology, it’s clear a quality product is developing in the form of healthcare.

  2. Health care is a business and physicians should have to compete for the patient’s they treat. This competition is what drives physicians to treat patients with respect and kindness. I think that it is a service that should be provided in a competitive manner so that we may have cheaper and better health care.

  3. I must agree with David when he says that competition will lead to better and cheaper care. The Affordable Care Act will help hospitals embrace economic models because as cold as it may seem: health care is still a service. Others can fight over whether or not it should be considered a right (I personally think yes) but somewhere along the road it stopped being considered a service.

    As a psychologist who practically lives alongside doctors, in fact even my sister is a doctor in training, I can honestly say it’s a calling. Offering to care and treat other but it’s still a business. The ACA will strip health care of romance but it could lead to better care. I’d rather have effective care without the frills.

  4. In my opinion this program could really contribute to improving the poor state of our health care system. I think the best way to get to outcomes based medicine is to have real market competition among physicians. And this competition will make people actually see what they pay for medicine and they’ll consequently look for the best prices and the best physicians.

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