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Hospital providers need collaborative ACOs with more than 100,000 lives to achieve savings, says analysis

"The future of accountable care depends on scale," says Lynn Barr, CEO of Caravan Health.

Jeff Lagasse, Associate Editor

Accountable Care Organizations with more than 100,000 lives can overcome the negative effects of statistical variation and more consistently achieve savings, according to a newly released paper from Caravan Health published in the Health Affairs Blog.

The analysis shows that ACOs with more attributed lives are better positioned to achieve savings for participating providers. Smaller ACOs can experience widely variable savings and losses simply due to statistical variation. This is a major concern as more ACOs are required to take on risk as the program matures.

The news comes as the number of ACOs is on the rise. So far in 2018, more than 120 provider groups have chosen to join Medicare's Shared Savings Program, or its Track 1+ model, under three-year contracts. With 65 renewing, there are now 561 shared savings ACOs in Medicare's lowest-risk accountable care model, according to the Centers for Medicare and Medicaid Services. The ACOs will add 1.5 million Medicare patients, bringing the total to 10.5 million.

Doctors and hospitals can earn a bonus from Medicare under the shared savings ACO program, given they meet certain spending and quality targets. Unlike other models, though, there are no penalties for exceeding certain spending benchmarks.

Toward the end of 2017 some accountable care organizations, such as Advocate Health Care, said they saved as much as $60 million in a single year by participating, while Caravan Health in Kansas City, Missouri saved some $26 million, to name two success stories.

Caravan Health, which commissioned the study, offers a collaborative ACO model it says helps providers effectively navigate the challenge of value-based payments. Since 2013, it has worked with more than 14,000 clinicians across 250 health systems, with its ACOs earning 95-97 percent quality scores and 10 times the national average of savings. 

Providers may need to change the way they do business to realize substantial savings year after year. Independent provider organizations in particular need to achieve the scale necessary to demonstrate measurable savings while maintaining their independence. This collaborative ACO approach addresses the challenge of unpredictable results and allows organizations to manage risk in a sustainable way.

"The future of accountable care depends on scale," Caravan Health CEO Lynn Barr said by statement.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com

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