Accountable Care Organizations (ACO) as described by Business Week
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On a computer in his St. Louis medical office, Dr. John Rice often pulls up a list of his 10 patients with the largest bills. They suffer from diabetes, heart disease, or emphysema. They sometimes land in the hospital where they rack up a long list of charges.
Rice's job is to make sure they don't set foot in that emergency room. To accomplish this, the chief medical officer of Esse Health, an 80-physician practice, does what policy makers say too few doctors do now and what they hope all doctors will do in the future. Using technology supplied by a private insurer, Rice has a window into his patients' health that extends far beyond the clinic's examining rooms. He can tell when patients have stopped taking their medication or when they're overdue for a routine test. Armed with that information, he can direct his staff to fill out a prescription and deliver it to a patient's home or schedule an appointment at a diagnostics lab. Rice once spent $40 on cab fare for a patient whose daughter couldn't pick her up from the hospital—a bargain, considering an additional day's stay would have cost $1,500.
The 57-year-old internist has a good incentive to take these extra steps. Every time he avoids a hospital admission or emergency-room visit, Esse splits the savings with the patient's private insurer. "I don't do it because I'm a great guy, I do it because I get paid to do it," says Rice. By Rice's estimates, his elderly patients spend 39 percent fewer days in the hospital over the course of a year than Medicare patients nationwide.President Barack Obama's health-care overhaul is just beginning to deliver on one of its goals: spurring physicians, hospitals, and health insurers to work together more closely to deliver better care at lower costs. The 2010 law calls for the creation of so-called accountable-care organizations. The idea behind ACOs is that doctors and hospitals agree to share with insurers the financial risk of caring for patients. In exchange, they get a cut of insurers' savings, under a formula that benchmarks the cost of treating an individual against a broader sample of patients.
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