ACOs face steep funding shortfall, learning curve

A majority of hospitals, medical centers and physician groups are developing accountable care organizations, but few have dedicated the resources necessary to build one successfully.

An understanding of how this part of health system reform works is sometimes lacking, according to the Accountable Care Organization Readiness Study released Sept. 21 by the management consulting firm Beacon Partners in Weymouth, Mass.

The Patient Protection and Affordable Care Act states that accountable care organizations for Medicare beneficiaries will launch on Jan. 1, 2012. On March 31, the Centers for Medicare & Medicaid Services issued a proposed rule on ACOs. A final rule is under development.

Beacon queried about 200 executives at hospitals, academic medical centers, ambulatory clinics and physician practices during the summer. About 92% were in the planning stages of an ACO, and 30% said they had an operational ACO.

Although significant work is required to create an ACO, the survey found that few health systems were devoting sufficient resources to establish one. CMS has estimated that an ACO will take $1.8 million to launch and run. The American Hospital Assn., however, has data indicating that $11.6 million to $26.1 million is needed to operate an ACO.

Forty-five percent of surveyed executives did not commit any money from operating budgets for ACO planning, and 28% were unsure how much had been given to this process. An additional 16% dedicated less than $1 million, and 6% gave between $1 million and $3 million. Only 5% committed more than $3 million. In addition, 44% did not plan to hire more employees to develop an ACO, and 25% were reallocating staffers.

Not all health care CEOs know about the ACO concept. About 15% are very familiar, and 61% are somewhat familiar. An additional 24% have no knowledge of it.

"Clearly, there is still a lot of confusion and uncertainty surrounding ACOs, but most health care organizations understand that they need to move forward with an ACO strategy," said Kevin Burchill, director of Beacon.

The Accountable Care Organization Readiness Study by Beacon Partners is available online. (link).