5 Questions to Assess ACO Readiness

Monday, December 6th, 2010
This post was written by Jessica Fornarotto

An accountable care organization (ACO) raises several strategic questions that must be answered quickly before healthcare organizations decide how they may want to participate in an ACO, says John Harris, principal with the consulting firm of DGA Partners:

  • Are we ready to be an ACO? What will it take to get ready?
  • For hospitals: If we succeed clinically as an ACO, will we drive down volume and suffer financially? And if we do, could we attract more market share to make up for the reduced utilization?
  • Can we pursue this on our own, or should we partner?
  • What will the financial impact be (investments, impact on operations, cash flow, etc.)?
  • What are the competitors planning, and how will that affect our plans?

Some will pursue ACOs as a defensive strategy to avoid having competitors take the lead and market share from them. This is true for hospitals in particular, but probably applies to physician groups as well. ACOs have to be considered with other key strategic initiatives, such as market share development, clinical integration, physician-hospital alignment and others. ACOs don’t stand on their own but rather tie in to these strategic initiatives. ACOs can be a vehicle for moving several of them forward in significant ways.

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