Accountable care organizations face profit dilemma
As accountable care organizations proliferate, the ones that succeed will face a new dilemma: how to fairly distribute their share of the money they save.
There are now some 360 ACOs participating in the Medicare shared savings program alone, plus many others that are participating in a variety of similar arrangements with private payers.
The amount of money any of them will have to divvy up is unclear at this point, but the authors of a new commentary in the Journal of the American Medical Association indicate that the most successful of the first crop of Medicare ACOs will receive a bonus of $5.2 million, which means individual participants will stand to collect several thousand dollars each.
In order for the ACO movement to succeed, shared savings should be distributed according to dimensions that recognize performance, equality, “systematic disadvantages,” luck and team contributions, according to the three physicians at Johns Hopkins University in Baltimore who penned the piece.
“Distributional fairness is intrinsically important as an ethical matter,” they write. “It is also instrumentally important; for example, if shared savings plans treat participating clinicians unfairly, those clinicians may be less likely to invest fully in the ACO's mission, undermining the likelihood of success.”
Using performance criteria is important, they write, as is a commitment to equal distribution that treats “like cases alike.” But there has to be recognition of systematic disadvantages—such as a more complicated patient mix or infrastructure shortcomings. Methodologies should also be avoided that “paradoxically penalize the prior achievements of high performers.”
Some clinicians may succeed or fail based on factors they have no hand in creating, so distribution needs to mitigate the tendency to over-reward good luck or penalize bad luck, the authors say.
And measurements aside, the Johns Hopkins physicians write, consideration must be given to how receiving a share of the savings pool will foster clinicians' commitment to the ACO. They note that this could be “analogous to an unexpected year-end bonus.”
“Disagreement will inevitably arise about what fairness requires for shared savings and about how to manage circumstances when fairness and effectiveness are in tension,” the authors conclude. “Future research should systematically examine shared savings plans across different dimensions of fairness and determine which characteristics are associated with the success of ACOs broadly considered.”
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