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The ACO challenge: Managing to targets

August 17th, 2010

By jeremy.engdahl-johnson

Accountable care organizations (ACOs) must manage toward actuarial targets, which is a key means to attain the end of more efficient care. This process requires both “supply-side” medical management and “demand-side” medical management. Here is an explanation of each:

Supply-side medical management services are what many consider the more challenging side of medical management but they are also what produce the savings. These services are intended to reduce utilization and payment for medically unnecessary services and also ensure that care is delivered in the most appropriate setting, which for an ACO should mean delivered by an ACO-associated provider. Clinical guidelines help evaluate the medical necessity of requested (or, retrospectively, rendered) services…

Demand-side medical management services optimize a population’s health so that demand for services will be lower. In particular, these services can impact ambulatory care sensitive admissions, preference sensitive admissions, readmissions, and ER visits.

For more on managing to actuarial targets, read the recent paper, “Nuts and bolts of ACO financial and operational success.” For more on medically unnecessary services, view this blog post or this paper.

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  1. August 19th, 2010 at 07:46 | #1

    Excellent Post…Thanks

    I think your post and the associated paper hit the nail right on the head when you stated – “Without medical management services working the supply side and demand side, utilization will almost always exceed targets.”

    As everyone continues to focus on the many variables associated with healthcare reform, there needs to be more attention focused on balancing both sides of the equation.

    Thanks again…

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