The commercial ACO contains elements of capitation and P4P, and most hospitals and health systems nationwide are already working on quality and safety initiatives. All of this is the foundation for a commercial ACO—yet there still a great deal of hesitation to participate. Why?
"Think of P4P as the bachelor's degree; [a commercial] ACO is your master's degree. But moving forward depends [on an organization's] strategic plan," explains Mark Shields MD, MBA, vice president of medical management for Advocate Health Care in Mt. Prospect, IL, and senior medical director for Advocate Physician Partners. (On March 22, Shields will join leaders from Sharp Healthcare and Blue Cross and Blue Shield of Illinois for a 90-minute HealthLeaders Media webcast titled Successful Commercial ACOs: Early Adopters Answer Your Questions.)
In fall 2010, Advocate Health Care signed a three-year agreement with BCBS of Illinois to hold doctors and hospitals accountable for performance and quality service. Advocate, which operates 10 hospitals around Chicago, agreed to limit the rate increases it negotiates from the insurance company.
Additionally, physicians and hospitals must meet performance targets in quality, safety, and efficiencies of the medical care provided to patients covered by BCBS of Illinois's HMO and PPOs. Advocate makes money by getting a share of dollars saved under the arrangement (financial terms and rate increases were not disclosed).
This commercial ACO model puts a greater share of the risk onto Advocate, however, as it must improve patient outcomes and reduce patient care costs in order to reap greater financial rewards in shared savings.