Accountable Care Organizations and Disruptive Innovation

Today’s Managing Health Care Costs Indicator is $1.1 Billion

Clay Christensen, the Harvard Business School professor who is the father of “disruptive innovation” has teamed up with Jeffrey Flier, the dean of Harvard Medical School, to declare that Accountable Care Organizations are unlikely to succeed because the “ACO concept is based on assumptions about personal and economic behavior – by doctors, patients and others- that aren’t realistic.”   (Wall Street Journal, 2/19/13)

Specifically, they declare that ACOs are unlikely to change ingrained doctor behavior – and unlikely to increase patient engagement.   They believe that health care reform needs to offer steerage to the most cost-effective facilities – much as the Medicare Advantage plans currently offer.  They also say that ACOs will be unable to impact the cost or quality of care for patients who spend substantial time in different geographies (such as the snowbirds who go to FL or AZ for the winter), or who refuse to follow their physicians’ recommendations. They point out that the total savings estimated from ACOs, for all the hype around these new organizations, is only $1.1 billion over five years, less than  0.05% of the Medicare budget.

One further concern about ACOs that the authors don’t highlight is the requirement for increased provider integration, which can lead to higher negotiated prices from employer-sponsored health plans, even if the ACOs offer cost savings to Medicare.

I believe that overall the Affordable Care Act can promote disruptive innovation.  Here’s a link to a JGIM commentary by Eyal Zimlichman and me on that topic.   Even Accountable Care Organizations can promote disruptive innovation to the extent that decision-makers in medical care choices are often physicians, and the move away from fee for service payment can provide openings for technologies that really save money, as opposed to the current approach of preferring technologies that are “accretive” in that they are simply layered on top of all the care and technology we already offer.

But the Christensen commentary is an important warning that many structures in health care reform could have unintended consequences, and could provide far fewer cost savings than advertised.  We have to study as we implement, and change as we learn.