ACO Healthcare

(Kory Razaghi) Governmental payers, commercial health insurance providers and the employer community are all pushing for an integrated healthcare delivery system where hospitals and physicians are held accountable for the quality and cost of healthcare. Regardless of the ACO healthcare success, healthcare providers will need to engage in a system that encourages quality measurement reporting, care coordination and more communication. At the center of ACO is a group of empowered primary care physicians who are equipped with data, leadership and resources to manage and coordinate care for patients throughout the entire community.

The most important aspects

Family physicians are considered the primary care providers and thus they are the most important within the ACO development. Growth of ACOs signals that the healthcare system is moving apart from the existing fee-for-service model that has been relied upon for making payment. Whether you are a participant in ACO or not, it is clear that, the current environment of payment will move away from the pure FFS (fee-for-service), towards a formula that promotes efficiency and value for patients. In other words the community is moving towards the system that seeks to pay for value as opposed to paying for volume.

Family physicians should be concerned about ACOs. The physicians should seek to implement a PCMH (patient-centered medical home) which involves the use of patients' registries, care coordination, health information technology and team care. These capabilities are borne to be rewarded by the new payment environment that features incentives and enhanced payments.

Structure & payment in an ACO

The ACO framework is a conceptual model that seeks to improve the quality of healthcare and efficiency through financial and clinical integration. The framework is taking different forms that seek to meet the local market conditions as well as the existing competition that is evident among healthcare providers. Nevertheless, ACO will fail over the long-term unless the framework is able to minimize fragmentation of care, variability and waste.

ACO receives payment for the services by the patient population that it serves. Incentives and payments within the framework should be structured in such a way that it fosters a shared responsibility for quality and cost. This offers the opportunity for higher earning potentials among the physicians providing care. The payment model features a fee-for-service component, performance incentives and a care-management fee. To attain the desired results it is important to balance out these 3 components with 50% fee-for-service, 30% performance incentives and 20% care-management fee.

Kory Razaghi heads the healthcare practice at Aptus Advisors, Inc. He has over 15 years of transactional and executive management experience including hospital operations, strategic planning, turnarounds, and financial management for a variety of healthcare organizations.  Mr. Razaghi has a demonstrated track record of turning around for profit, and not-for-profit, healthcare organizations through the design and implementation of critical initiatives

Kory Razaghi is a member of the Healthcare Financial Management Association (HFMA) and Society of Competitive Intelligence Professionals (SCIP).  Additionally, he has published articles on innovative medical devices as well as lectured at UC Irvine on securing private equity investment.  He is also a member of Paul Merage School of Business Dean's Leadership Circle.

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