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The Podium

Control health-care costs by shifting care to “organic ACOs”

Health care in the United States has traditionally been financed using a “fee for service” payment model. But the Affordable Care Act of 2010 has created an important new “at risk” payment model for healthcare providers as part of the broader reform of the healthcare system. Health care providers, such as hospitals and physician groups, are forming Accountable Care Organizations (ACOs) and will be paid to provide care for defined groups of patients and be at risk for the success and cost of the care they provide. As health-care providers shift some of their care to their ACO units, there is an opportunity to control health-care costs by creating formal ACOs out of existing networks of providers in the community who already work together effectively. The professional ties of these clusters of physicians are often invisible, but they can now be discovered using novel analytical techniques pioneered here in Massachusetts.

New analytic methods developed by Harvard researcher Nicholas Christakis and by Activate Networks, a Boston-based business-network-analytics company that was spun out of his lab, can illuminate these networks and support their use in new care delivery systems. For example, it is possible to use transactional data (“claims”) to understand care patterns and to identify groups of physicians that appear most ready to become accountable for a defined patient population. These close-knit groups of physicians, or “organic ACOs,” are already coordinating care and can give the new ACO the ability to manage care processes and costs more effectively.

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Better coordination almost always translates to lower costs. For example, a recent study by Craig Pollack and colleagues from Johns Hopkins found the cost of care for patients who stayed within existing closely collaborating clusters of physicians was 10 to 15 percent lower compared to organizations where physicians do not closely collaborate.

As hospitals and physician groups explore the uncharted waters of ACOs, most have not considered the organic ACO strategy, because the technology to map physician networks is new. Instead, health-care providers are taking a variety of approaches to ACO formation, including hospitals hiring affiliated providers. But these methods frequently cut across organic ACOs and thus the opportunity for cost savings may be lost.

There is good reason to believe that network approaches can be used to facilitate changes in practice patterns that will be necessary for successful ACOs. Network methods can also engage patients in improving their health, another contributor to ACO success.

To reduce the cost of health care in Massachusetts and improve care coordination, health-care organizations in Massachusetts should form their ACOs first by understanding the professional social networks of Massachusetts providers, focusing in particular on the organic ACOs. This approach will promote better care coordination and lower costs.

Larry Miller is CEO at Activate Networks, Inc. He can be reached at LMiller@ActivateNetworks.net.
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