Mark McClellan's recent Brookings Institution proposal focuses on local reorganization as a key to healthcare reform.  A more efficient local healthcare provision network, he argues, will reduce consumer costs and increase effectiveness (two rather undisputed objectives).  The proposal is a call for government to initiate new incentives and promote a new model of local care provision.

The proposal sets forth four clear objectives or principles to guide local health care reform (also known as "reforming health care payments"):

1. Promote coordination, collaboration and accountability among all actors involved in providing health care at the local level.

2. Ensure that local care programs are flexible enough for health professionals to institute creative new approaches to continuing problems.

3. In payment, any system should reward the value of care over the volume of care.

4. Further promote transparency between consumers and providers of health care so that consumers are informed and the market can function more smoothly.

The proposal argues that Accountable Care Organizations (ACOs) would successfully elevate local health care provision to a new level of accountability and effectiveness.  While ACO models have been successfully implemented in certain localities, McClellan outlines a framework that would allow for  the ACO models to be improved and adopted in more areas.

 

ACOs will include a variety of healthcare providers that can fulfill all the patients' needs.  These proviers will collaborate on pricing and coordinate care provision. 

 

The collaboration is key not only because it helps to increase efficiency, but also because it promotes innovation.  The ACO cost structure ensures that providers and consumers share the savings incurred from health care innovations.  When the process becomes cheaper, both provider and consumer benefit.  Moreover, one provider's investment in new technology or a more efficient technique benefits the entire network. 

 

Finally, since health care pricing should be founded on value and not volume, ACOs must measure the quality of care provided to ensure that cost reduction is the product of increased efficiency and not reduced care.

Public and private actors alike will need to take steps to design and sustain ACOs.  Private health care providers must first organize with one another into a network that shares information and provides mutual organizational support.  A few members of this network, McClellan argues, must be identified as primary innovators that spur cost reduction.  In the ACO's initial agreement, members of the network must set spending and quality targets and consent to how savings will be distributed among them.  Though not specified in the plan, the government can incentivize the organization of ACOs and regulate their benchmarks for quality and spending.