Using “Accountable Care” to Save Medical Costs

Few policy issues are fraught with more confusion, complexity, and disagreement that health care costs. Many argue that ballooning state and federal budgets are driven by the rise in healthcare costs being borne by governments. This is mirrored in rising healthcare insurance premiums being paid by individual community members.

There is little disagreement regarding the fact that costs are rising, but there is considerable misunderstanding about why they are rising and what should be done to turn things around.

Some ideas have been shown to be red herrings, like enacting tort reform laws to limit the rights of medical malpractice victims. Beyond having serious consequences on patient safety efforts, these legal changes do nothing to impact costs.

Other suggestions have far more potential. One of the most popular is known as shifting to “accountable care.”

Accountable Care
The basic idea behind the concept is straightforward. Under the traditional model, medical care providers receive a fee for each service they provide. So much money for an x-ray, so much for a particular surgery, and so on. The problem is that this incentivizes more care not better care. Facilities actually make more money the more medical care that patients’ need–a terrible system when trying to cut down on overall healthcare costs.

Accountable care changes that by de-linking particular services with payment. Instead, compensation is more closely based on the patient’s overall well-being. In other words, doctors have financial incentives to get the patient well (and out of the hospital) in as efficient a manner as possible. In this way, facilities do not lose money by performing fewer services. It may also have a positive effect on minimizing medical errors, because those errors would prove costly to the facility, instead of resulting in more services and more reimbursements (like under the current system).

Patient Safety Potential
A New York Times story recently profiled a Chicago area hospital, Advocate Health Care, that has operated under the accountable care model for quite some time–since 1995. The story notes how “under the agreement, hospital admissions are down 6 percent. Days spent in the hospital are down nearly 9 percent. The average length of a stay has declined.”

With numbers like that, it is hard to see why all facilities do not make the shift. But observers note that changing over to this model is not a quick or easy process. After all, Advocate Health Care has been working at it for eighteen years. It may not be feasible to expect others to make the jump overnight.

Still, the fact that there may be a learning curve should not deter a full march ahead for more and more facilities. The Affordable Care Act (Obamacare) is encouraging the trend, incentivizing more facilities to shift to the accountable care method.

One terrific side effect of the shift is the increased value that medical care providers have in looking out for a patient’s overall well-being, including preventative care. For example, Advocate now has special teams to monitor those with higher risks of developing serious complications later on. That monitoring minimizing the long-term harm–saving money AND improving the patient’s quality of life. Lining up the financial incentives to what is truly in the best interest of the patient is a system that has great potential and should be supported.

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