August 9, 2012

ACO Market Will More Than Double in 2013 by Jim Bloedau

We are very much in the early days of ACO experimentation and although the data is thin, the number of development efforts is exceeding expectations and showing a 149% growth in Medicare ACOs since the 65 identified in April, 2012.  Initially, CMS regulators had estimated that initially 75 to 150 ACOs would be formed to care for Medicare patients. With the July 9, 2012 announcement of 88 additional ACOs being added, the total is now 153 since the initial 32 Pioneer Model ACOs were announced in December 2011 and are currently providing coverage for 2.4 million patients.  According to CMS Deputy Administrator Jon Blum, almost half of their ACO programs are led by physicians that serve less than 10,000 patients across a wide geographic mix and the nascent 88 show a range of 29 up to 2,249 physicians participating in each.  

Considering  that:
·         CMS ACOs accounted for a small portion of the 221 ACOs that include hospital, physician, payer and community-based ACO entities identified by Leavitt Partners in their June 2012 update,
·         A quick review of recent ACO news releases shows increased activity by payers in the expansion of their ACO partnering with providers and providers showing growth in the number of physicians joining an established ACO, and
·         More than 400 organizations have submitted notices to apply for the CMS 2013 ACO program during their current enrollment period that ends September 12th, 2012, then

we may well be exceeding 300 ACOs today and expect this number to more than double next year.
As to who’s driving the overall growth, the Leavitt data shows hospitals (53%), physician groups (31%), payers (13%) and community-based entities (2%). 

If you believe that innovation comes from the provider side most of the time, then you should be a bit surprised that the biggest payer of all is driving the ACO growth at this point.  Innovation in the government driven models will be structured around the rudimentary blocking and tackling of reporting quality, administering risk and distributing benefits.  We can expect provider in-house systems to handle the essentials of this workflow, grow in analytical sophistication and be rapidly moving toward a complete system for managing and distributing a pool of “at risk” money.

On the other hand, some have speculated that the more flexible private ACOs will produce the greatest variety of innovation and the more successful risk models.  The difference is that this growth in the variety of models coming from payer partnerships appears to many to be more “customer satisfaction” and wellness oriented than administrative.  It is this marriage of provider to payer’s offered functionality that so far does not assure a complete system to handle the mechanics of risk.

Given there are many viewpoints and regardless of which you believe, we are looking down the barrel of double to triple annual growth in the ACO market in the short term and astronomical cumulative annual growth rates (CAGR) over the longer term for developing applications.  We can expect this and PCMH growth to logically extend the utility that ambulatory and remote care vendors (e.g. PMS, EMR, HIE, portals, home health, disease management and other xHealth applications) offer to an emerging mix of professional and consumer applications to satisfy the “new middle market. It will also create pull-through and foment other needed application for the remote care markets that include mobile, big data analytics and the nascent data certification markets.

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