Organizations. The Bridge to. Accountable Care ACO. Executive Summary ACOs: The Foundation to Boost Quality and Reduce Costs.
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1 January ASBPE GOLD 2010 ASBPE GOLD The Bridge to Accountable Care Organizations DIGITAL MAGAZINE DIGITAL MAGAZINE GENERAL EXCELLENCE GENERAL EXCELLENCE ACO Executive Summary ACOs: The Foundation to Boost Quality and Reduce Costs This is the EXECUTIVE SUMMARY from HealthLeaders Media Breakthroughs: The Bridge to Accountable Care Organizations In collaboration with
2 B Y j o e C A N T L u p e 42 Executive Summary ACOs: The Foundation to Boost Quality and Reduce Costs ACO Although still an evolving concept, accountable care organizations (ACO) have been branded in academic circles, espoused by healthcare leaders, and reaffirmed by the federal government as a significant form of integrated care between physicians and hospitals that may work to improve the health of patient populations while reducing costs. As such, the ACO has emerged as one of the leading reform ideas that healthcare leaders have begun initiating nationwide. Whereas some hospitals and physicians are reluctant to embrace the concept while they wait for clear regulation from CMS, others believe that potential financial models in some form of d savings may be the way toward the reform goals of reducing costs and improving outcomes during uncertain economic times. The hospitals profiled in this edition of HealthLeaders Media Breakthroughs are at the forefront of ACO development, some
3 Executive Summary ACOs: The Foundation to Boost Quality and Reduce Costs 43 From California to Nebraska and South Carolina, accountable care organizations are being tested to improve quality and reduce costs in healthcare. As the decade ends and a new one begins, the emergence of ACOs has begun to take over the healthcare dialog in terms of potential, planning, and uncertainty. involved in pilot projects that are certain to change over their five-year time frame, with shifting regulations and evolving financial structures. Still, these healthcare leaders have a d focus to move the ACO framework forward, insisting their organizations have the tenacity to follow through on the d vision of a foundation that rewards based on quality of care and not procedures performed. Sharing problems and working together toward solutions is the premise of the ACO, and it is exemplified in Omaha, NE, where The Nebraska Medical Center and Methodist Health System are initiating an unusual partnership. What makes it unique is that the Nebraska Medical Center and Methodist normally compete on many levels within their region, and their partnership in the ACO marks the first time competing organizations are involved in the process. The 624-bed Nebraska Medical Center and Methodist Health System, which includes the 430-bed Nebraska Methodist Hospital, are coming together with the purpose of cost reduction and patient quality under an ACO with the belief they can improve specific patient outcomes, such as reducing hospital infection rates, and develop medical home models in the Omaha area. In that same fashion, Palmetto Health in Columbia, SC, is approaching the development of an ACO to achieve a larger strategic goal of clinical integration. The plan moved forward, under the guidance of physician leadership, when the health system created an LLC that will be a contracting vehicle for its medical staff. The Palmetto Health Quality Collaborative, LLC, is an ACO designed to offer Palmetto s 1,000-plus-member medical staff the foundation to focus on outcomes that drive value and reduce costs. Initially, the ACO will focus on a set of clinical initiatives that ACO members will hold each other accountable for achieving. Eventually, it will be a physician contracting entity to carry risk for population health management. The ACO is also focusing on gaining regulatory approval, building infrastructure capabilities for coordinated care, and defining a set of core clinical goals, with the objective of changing the system.
4 Executive Summary ACOs: The Foundation to Boost Quality and Reduce Costs 44 The Orange County, CA based Monarch HealthCare is advancing its own goals of ACO management as well. Like Palmetto, Monarch is defining the patient population it serves and has begun to establish a spending target that reflects the predicted costs for its patients. Under the plan, each ACO provider that demonstrates it can meet these goals will receive a portion of the savings earned. Monarch is embarking on a journey toward becoming an ACO to broaden its population base and upgrade patient care. Monarch includes 2,600 independent physicians, 20 hospitals, and more than 20 urgent care centers. Monarch is part of a five-year pilot with two other participants, Healthcare Partners Affiliates Medical Group in Torrance, CA, which has more than 1,200 employed and contracted specialists, and Anthem Blue Cross, the largest health insurer in California. The pilot program is spearheaded by the Engelberg Center for Health Care Reform at the Brookings Institution and the Dartmouth Institute for Health Policy and Clinical Practice. Monarch is implementing an ACO model with a strategy to incorporate most of its physician base into the plan as well as show the value possibilities for patients in its current PPO plan. Still, the plan is not without challenges, the first being to identify potential member patients. Like other healthcare systems, Monarch wants to distance itself from the HMOs and integrated plans of the 1990s. The prospect of an HMO-like future reminds too many executives of the past, but many say that ACOs can be built on the lessons and mistakes of the HMO era to better manage a patient population s health quality and expenses. Indianapolis-based Franciscan Alliance/St. Francis Hospital and Health Centers, which coordinates care for 35,000, including the Franciscan Alliance s 5,000 employees in the region, is by no means starting from scratch. Its leadership, however, believes its thriving network can build itself with additional patient applications for an ACO network using its d savings approach to managing patient care. Franciscan Alliance is one of four Catholic health systems that are owners of Advantage Health Solutions, which offers HMO and point-of-service plans to employers. While the network doesn t have every piece of the ACO plan in place, it has the experience and culture of managing health and carrying risk that gives it a decided step forward. In addition, the infrastructure is in place, as hospital leadership sees it. The approaches described in this report are a good example of the framework needed for reform, having established specific committees to examine specialty areas in which to work and noting that IT is an especially delicate area that will need to be addressed for coordinated care. These organizations are breaking the mold and creating a new one in the process.
5 About PricewaterhouseCoopers Committed to the transformation of healthcare through innovation, collaboration and thought leadership, PricewaterhouseCoopers Health Industries Group offers industry and technical expertise across all health-related industries, including providers and payers, health sciences, biotech/ medical devices, pharmaceutical and employer practices. The firms of the PricewaterhouseCoopers global network ( provide industry-focused assurance, tax and advisory services to build public trust and enhance value for clients and their stakeholders. PricewaterhouseCoopers has aligned its professional service offerings around the future direction of the health system. By applying broad understanding of how individual, specialized sectors work together to drive the performance of the overall health system, the Health Industries Group is positioned to help clients, industry and governments address the changing market forces of globalization, consumerism, consolidation and expansion, regulation, technology, and margin compression. More than 163,000 people in 151 countries across our network their thinking, experience and solutions to develop fresh perspectives and practical advice. disclaimer: 2010 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. About HealthLeaders Media HealthLeaders Media is a leading multi-platform media company dedicated to meeting the business information needs of healthcare executives and professionals. To keep up with the latest on trends in physician alignment and other critical issues facing healthcare senior leaders, go to: Sponsorship For information regarding underwriting opportunities for HealthLeaders Media Breakthroughs, contact: Paul Mattioli, Senior Director of Sales 800/ pmattioli@healthleadersmedia.com Looking for the rest of the issue? To view this full issue of HealthLeaders Media Breakthroughs: The Bridge to Accountable Care Organizations, please click here to download: Copyright 2011 HealthLeaders Media, 5115 Maryland Way, Brentwood, TN Opinions expressed are not necessarily those of HealthLeaders Media. Mention of products and services does not constitute endorsement. Advice given is general, and readers should consult professional counsel for specific legal, ethical, or clinical questions.
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