Getting the Balance Right on ACOs

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It sounds simple: to fix American health care we just need to spend less on ineffective treatments and invest more in high quality medical care. And like solutions that sound simple, getting this balance right can be devilishly difficult.

Traditional fee-for-service medicine makes balancing cost and quality especially difficult because it lacks coordination between various providers of care. The shift to more managed care in the 1990s had promise.

But too often it meant focusing on lowering cost at the expense of higher quality care that actually makes life better for patients.

Now comes a news strategy: Accountable Care Organizations to be deployed by the new health reform law are designed to help patients, physicians and payers to separate the health care wheat from the chaff. A lot is riding on these ACOs, they aspire both to save money from avoiding ineffectual, inefficient or in appropriate treatments while identifying better care that actually improve health outcomes.

A new report published in this month’s American Journal of Managed Care provides evidence that a valued-based approach, especially as applied to pharmaceutical treatments, makes sense for U.S healthcare now and in the future. The article contrasts cost control that sees every therapeutic option as a nail to be hammered, as opposed to a balance between weeding out inefficient spending while seeking quality improvements plus better coordination of care.

An example of the second strategy which includes quality improvement is shown with statistics for patients with congestive heart failure. The authors point out those pharmaceutical regimens for these cardiac patients cost approximately $440 per patient per year, but will prevent numerous hospitalizations which cost thousands of dollars ($17 billion in Medicare spending alone in 2007 for congestive heart failure patients).

The published study was conducted by the National Pharmaceutical, American Medical Group Association and Premier healthcare alliance in conjunction with seven highly-respected hospitals and clinics.

Medicare needs to quickly adopt a value-centered system of healthcare. The new healthcare law with its Accountable Care Organizations can show the way.