A hot debate in the healthcare world right now is whether the long-awaited ACO reimbursement model introduced through the Affordable Care Act (ACA) will achieve its goals. I think critics are missing the point. ACOs are just one of many emerging and evolving reimbursement models that are moving US healthcare away from a fee-for-service, pay-for-volume approach and towards value-based payment models.

Accountable Care Organizations (ACOs) are sets of healthcare providers — including primary care physicians, specialists, and hospitals—that work together collaboratively and accept collective accountability for the cost and quality of care delivered to a population of patients. Even if this structure does not prevail, the ideas behind it have already set off a wave of change within the healthcare system. Bundled payments, gain-sharing, managed care, readmission penalties, and value-based purchasing are all variations on the same theme of fee-for-value. Healthcare is moving towards payment models that are based on cost-effective outcomes.

The transition to a value-based payment system won’t be easy. At the moment, US healthcare is broken into silos of care that are optimized locally based on a dysfunctional fee-for-service payment model. Poor hand-offs between these silos result in failed transitions that undermine clinical outcomes and waste a lot of money. In addition, these models create significant gaps in the visibility of outcomes, making it difficult to know what is (and is not) an effective clinical intervention. For example, up to 30% of hospital readmissions are patients that are discharged from one hospital, only to be re-hospitalized at another.

There are two potential approaches to fixing the fragmented care silos. One approach is to vertically integrate. Essentially, buy up the resources required to deliver integrated care, rip out fragmented disconnected technology, and replace it with an integrated platform that spans most or all of the key components of the healthcare delivery system. Kaiser Permanente is often held up as an example of what can be accomplished through a fully integrated model.  The EPIC EHR offers the kind of end-to-end integrated platform that aspires to manage virtually all aspects of healthcare delivery.

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