ACO Gold Rush: Consultants' Dream and Hospital-Physician Nightmare

Depend on it, sir, when a man knows he is to be hanged on a fortnight, it concentrates the mind wonderfully.

Samuel Johnson, September 18, 1777

April 7, 2011 - Yesterday I wrote a tongue-in-cheek blog on Accountable Care Organization (ACO) “buzz words.” I was only half-kidding. The 429 page Health and Human Services ACO “Rule” document just released guarantees a gold rush for consultants and lawyers to help hospitals and physicians form ACOs, which will start being certified on January 1, 2012, not so far away when you’re dealing with something as complex as ACOs.

Why the rush? Well, it’s not only the Gold, it’s the fear of being left hanging out there in the Medicare Cold and the unknown. Nobody knows if these new-fangled things called ACOs will really work but you can't take a chance on them not working.

Frankly, I agree with Robert Laszewski, an expert in such matters, who wrote in today's The Health Care Blog,

"ACOs won’t succeed in the near term any more than capitated HMOs and IPAs accomplished anything in their day because there is no reason—no imperative—for the health care industrial complex to want them to succeed."

"Here’s a flash for the policy wonks pushing ACOs: They only work if the provider gets paid less for the same patient population. Why would they be dumb enough to voluntarily accept that outcome?"

An April 2 Kaiser Health News article, “ACOs Spell Gold Rush for Health Care Consultants,” produced in collaboration with the Washington Post lays out the Gold field stakes.

It quotes Ian Morrison, the eminent futurist and founding partner of Strategic Health Perspectives in Menlo Park, California.

“The ACO issue has all the pieces that drive consulting. There are legal, information technology, and cultural changes needed to make it work, so lawyers are happy as hell, and so are management consultants.”

In response to the ACO hoopla, oversold ACO conferences abound, and consultants are charging $25,000 to $ 1million to create and launch ACOs. Hospitals and physicians are fretting and posturing about who should control these as-yet-ill-defined-evolving entities.

Premier, a Charlotte alliance of 2400 hospitals and 70,000 physicians, is charging $150,000 for an annual membership for access to its team of ACO consultants. The Camden Group charges $200,000 to $500,000 and the Advisory Board up to $1 million for implementing ACOs.

Yet nobody knows if ACOs will function well in the current hospital-physician environment. But history tells us fools rush in when stakes are high but unknown.

What’s the rush? Health and Human Services will conclude its public comment requests by May 30, 2011, and will issue its final Rule by year’s end. The first ACOs will be launched in January 2012.

No hospital or physician group wants be left hanging out there in the January cold, swinging in the reform breeze, without an ACO plan.

Tweet: ACOs are consultants' dreams and hospital-physicians' nightmares, costing up to $ 1 million to set up and then maybe not even working.


Richard L. Reece, MD, has posted 1723 blogs at medinnovation blog over the last four years. His main themes concern health reform and innovation and how they impact physicians and American culture as a whole. He works closely with the Physicians Foundation but his opinions are his alone. He has written eleven books. His latest book, The Health Reform Maze, is now at the publishers and will be released in June. Doctor Reece’s website, www.doctorreece.com, will be up and running in several days. He invites comments on his blog and will respond to each comment on his blog or to him directly at 860-395-1501 or rreece1500@aol.com.