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Check Under the Hood: Six Tips for Looking Beyond the Surface When Shopping Accountable Care Organizations

Published 3/5/2021

When you shop for a car, it's unlikely that you can evaluate the entire vehicle by the cost of its hub caps. Identifying quality in a car is best determined by establishing your needs and finding a car that will reliably meet them. Similarly, shopping for an Accountable Care Organization, or ACO, requires a look under the hood at what you're truly getting for your business and employees. Using these tips as a guide may help you avoid choosing a plan that will ultimately be a lemon.


1. Focus on total medical cost, not individual service cost.

Imagine that you are in the market to purchase a new car – do you buy the parts for this car and have it built, or do you buy the car pre-built? Buying the parts yourself could be risky – making sure that you're getting the right parts and the right number of parts, as well as finding the technicians to build the car using the parts you bought. You may save a little money on some of the parts, but you will likely overspend in other areas – and unforeseen and costly issues may creep up. The same is true for employers that evaluate health plans based on the cost of each individual CPT code. Healthcare cost should be evaluated based on the total amount paid – not on the individual parts and pieces of healthcare.


2. Remember the importance of price structure.

Physician-owned ACOs that utilize capitation, like Kelsey-Seybold Clinic, usually reduce total medical cost. Through capitation, the ACO is paid a fixed fee per patient, per month so that the providers themselves bear financial risk. Physicians in this structure have an incentive to keep patients healthy by managing chronic conditions and delivering routine care that can prevent more expensive, acute care in the future. The better their patients do, the better the physicians do – and the more the employer saves. Not all ACOs use capitation to control medical costs.

As an example of the impact price structure can have on cost, the City of Houston, as shared in the Houston Chronicle's article, "Ounce of Prevention," was able to realize a cumulative savings of $42 million in total medical cost over three years, thanks to a capitation arrangement with Kelsey-Seybold and KelseyCare in collaboration with Cigna. Overall, KelseyCare delivers healthcare at a savings of up to 30%, when compared to other healthcare plans offered in the Greater Houston area.


3. Choose an ACO recognized for quality care.

Within an ACO, physicians work together as a team to set standards and procedures that help providers make improvements across the organization. In individual practices, this type of collaboration resulting in higher quality is difficult to achieve. Independent organizations like the National Committee for Quality Assurance (NCQA), which certified Kelsey-Seybold as the nation's first accredited ACO, are a good resource for verifying quality in an ACO.


4. Value-based healthcare can deliver the best bang for your buck.

In medicine, "value" means is getting the best bang for your buck. A balanced approach is to look for the "Triple Aim," a framework developed by the Institute for Healthcare Improvement (IHI) with the intention to assist healthcare systems in optimizing performance, reducing costs, and improving patient care through a variety of interventions and metrics. Kelsey-Seybold's philosophy of care is based on the Triple Aim, which works best to deliver on the promise of value when all providers and affiliates of the organization are aligned, when the system is coordinated, and when carrier partners support risk-based arrangements.


5. Look for care coordination.

Going back to the Triple Aim, one way quality is reflected is through care coordination. A tightly knit physician group working together to provide coordinated care that treats each patient as a whole is going to result in better health outcomes – and a more productive employee.


6. Consider size and coverage.

Even small employers can benefit from an ACO, depending on their employee population's care needs. And even though many ACOs are based in specific metropolitan areas, for larger employers with populations spread out over the country, it makes sense to offer an ACO in geographic areas with concentrations of employees. No matter your size, an ACO makes taking control of healthcare finances as easy as putting the car on cruise control.

1 O’Connor, Kyrie. “Ounce of Prevention.” Houston Chronicle, 24 May 2015.



Patrick Carter, MD, MBA, FAAFP

Medical Director for Care Coordination and Quality Improvement and Chairman, Department of Family Medicine

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NOTE: Each employer plan is separately underwritten and results will vary based on the population demographics and other factors.