The ACO Model Figures in Most Hospitals’ Futures

Medicare Pioneer ACO

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Over 80 percent of surveyed hospitals are making future plans to join or are already participating in an accountable care organization (ACO), according to a new study from L.E.K. Consulting, a global strategy consulting firm.

Hospital executives also intend to invest significantly on information technology (IT) and facilities over the next five years in order to remain competitive, the survey determined.

The fourth annual Strategic Hospital Priorities Study, which surveyed nearly 200 U.S. hospital decision-makers including CEOs, CFOs, COOs, material managers and purchasing directors, found that 60 percent of respondents expect bigger budgets in 2013, and plan to dedicate the most money to IT, followed by drugs/pharmaceuticals, facilities and medical devices.

The most critical initiatives of hospitals’ strategic plans in 2013 continue to be cost management, data connectivity across the spectrum of clinical care, and utilization of outcomes data, as rising enrollment in Medicare and Medicaid programs will further erode margins, the study says.

Hospitals are investing in mechanisms that will help them improve quality metrics and outcomes and gain a competitive advantage in the marketplace, researchers note. Researchers also found that there will be major changes in purchasing dynamics, including the following:

  • Twelve percent of hospital executives report that their organization will likely adopt payor capabilities over the next five years.
  • A significant number of hospitals are acquiring physician practices.
  • Hospital administrators and purchasing departments are centralizing more decisions and using more complex cost/benefit analyses to inform purchases. This changing dynamic has rattled the traditional sales model for MedTech companies — nearly 80 percent of administrators rank group purchasing organizations (GPOs) as having the greatest influence on their purchasing decisions, followed by distributors (50 percent) and manufacturer’s sales reps (45 percent).

Physician referrals and preferences, though still required, are no longer sufficient in the purchasing decision relationship. Now, 75 percent of hospitals require sales representatives to make an appointment instead of dropping in on physicians. More than half of respondents (53 percent) say they limit reps’ interaction to purchasing departments only.

Additional findings are available in the L.E.K. Strategic Hospital Priorities Study Executive Insights report. More information about the four fundamentals of a true customer-centric model and opportunities for MedTech companies can be found in the Customer Excellence: Business Model Innovation for MedTechs Executive Insights report.

Source: L.E.K. Consulting April 9, 2013:

A Strategic, Best Practice Approach to Improve CMS Star Quality Ratings,

A Strategic, Best Practice Approach to Improve CMS Star Quality Ratings, shares how to stratify and prioritize strategies to improve quality ratings and insight into the future direction of the CMS Star Quality program, in this 45-minute webinar presented by Joseph Johnson, vice president, L.E.K. Consulting.

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