Healthcare: Cheap at Twice the Price

Since the Affordable Care Act of 2010, physician practices and hospitals have been investigating and implementing strategic relationships called ACOs (Accountable Care Organizations).  Generally speaking, one of the goals of the ACA is to promote better care by providing financial rewards and punishments for healthcare practices that have good patient results or poor patient results, respectively. 

Consider: An elderly Medicare patient, from a long-term care facility, develops pneumonia and goes to the hospital…after a week or so, the patient is treated and goes back to the long-term facility. 3 weeks later, the patient has a recurrence of the pneumonia…and is readmitted to the hospital.

Under the new ACA rules, Medicare could consider the quality of care from the hospital as poor…since the patient was evidently NOT cured of the pneumonia, and was released too soon…and, therefore,  not worthy of a full reimbursement for the patient’s medical care.  This means that the hospital pays a price when patients come back to them for the same problem.  Enter the Accountable Care
Organization!

The ACO is a group of health organizations…physician practices, hospitals, diagnostic centers, skilled  and long term care facilities…and more.  The idea is that these organizations work together better…by using integrated networks for sharing information…and then they can keep better track of the patient treatment and progress.  In return for good care and good patient results…the ACO gets a bonus from Medicare, which is divided among the group.

The rub…from my perspective…is that this arrangement presumes that the patient will get objective, clinical treatment and decision making from everyone.  In the example above, what COULD happen if the hospital and the long term care facility were members of the same ACO ?

The patient comes back to the facility, and three weeks later the nurse taking care of the patient thinks that pneumonia warrants a trip back to the hospital.  The administrator of the facility says….wait a minute…we can’t send the patient
back or we’ll get slapped by the hospital (who sends us lots of business)
because they’ll get paid less for the patient stay…so, let’s just keep the patient here and schedule the on-call physician to see them as soon as possible.

In the end…we all want good care at costs that are manageable…but what happens if the incentives within ACOs go to those who keep patients from being treated…and the patients get sicker…doesn’t that mean we may end up paying MORE to get that person well?

Stay active…Keep moving!

Mike