Understanding the ACO Pioneers Successes and Failures

First year pilot numbers are out for the first ACOs. They're a mixed bag. About 1/3 performed well, 1/3 did mediocre, and 1/3 are anxiously leaving the ACO pioneer program.

People like to yell and scream as the healthcare system changes. It's difficult. A lot of legacy healthcare pundits were happy with the results of the ACO pioneer program because the data didn't appear to be overwhelmingly supportive of ACOs. But the data is actually extremely supportive of ACOs.

The hardest thing to do in a startup is prove product viability (I haven't; I still sell dreams). Similarly, paradigm shifting payment structures must prove viability. The leading 1/3 of ACOs did in their first year trying. 1/3 is phenomenal.

But what about the 2/3 that failed? Well...

How many companies with thousands of employees across dozens of physical locations with a broad base of skills in a very rigid hierarchy have successfully inverted their revenue models and associated cost structures in 1-2 years utilizing mostly unproven technologies? 2/3, if not 9/10, were destined to fail. No amount of normalization of data can account for inadequate and unprepared management in a radically new revenue and cost structure. ACOs will disrupt fee-for-service (FFS) providers because ACOs employ a disruptive business model that solves Clayton Christensen's jobs to be done theory. FFS providers job is to administer more care. ACOs job is to keep you healthy and out of clinic / hospital. ACOs are fundamentally aligned with patients health needs, FFS providers are not. As such, in the long run, they will deliver the best care at the lowest prices. These first batch of successful ACOs are a harbinger of what's to come.

Now all that's left to be done is to propagate the management practices of the best to the rest.