Are You Ready for an ACO?

Margaret Dick Tocknell, for HealthLeaders Media , June 5, 2012

What financial and human resources will you need?
"There is no way to underestimate the dollars and organizational time it takes," says Marvin Eichorn, senior vice president and CFO of Mountain States Health Alliance, which began developing its ACO from scratch 18 months ago. He estimates his group's investment is $5 million, which doesn't include soft dollars like employee time on the project. He says it could take another $5 million over time to get the ACO where it needs to be. Mountain States contracts for its back-office capabilities to lower costs; Eichorn estimates that the investment could easily triple or quadruple if it had to buy all the information systems, hardware and software, plus hire staff to run the operation.

Lehn at Banner Health says forming an ACO is a costly proposition, but because his organization already had the infrastructure in place, it didn't view the cost as prohibitive. Wheeler describes a similar situation at Northwest Metro Alliance: Together, Allina and HealthPartners already had many of the components in place when they began their ACO. "Where a lot of people are still talking about implementing the system, we're talking about optimizing the system," says Wheeler.

Despite that advantage, Wheeler notes that changing the system and having a significant impact on total cost of care, even with the components in place, requires a lot of hard work, collaboration, and true commitment to the triple aim of healthcare.

Teitelbaum warns that the human and financial cost "isn't discrete. It's ongoing."

According to the April HealthLeaders Media Intelligence Report on ACOs, 54% of healthcare leaders whose organizations are or plan to be part of an ACO estimate that annual infrastructure investment for their ACO will amount to more than 1% of attributed patient costs each year.

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