IPA 2.0 the Preferred ACO Chassis?

By Gregg A. Masters, MPH

Earlier his morning I received an email from a colleague watching the ACO space for one of his clients. He wanted to draw my attention to an announcement by a Northern Virginia based company that supports physicians in independent practice. He also offered his client as commentator on the significance of this announcement for the emerging accountable care industry.

I promptly read and followed the hyperlink tree for backstory on the announcement and am now called to author this blog post.

Here is the seemingly superficially benign headline with considerably deeper dive significance grabbing the moment:

Arlington's Privia Health lands $400M to begin national expansion


Thus far the ACA rollout in general with all its misdirected and misinformed ideological representations in the media and ‘monkey courts’ in the Congress, and the ACO uptake chatter in particular has centered on major moves by nameplate operators in the space (hospitals, health systems and health insurers re-imaging their business models), with a smattering of regional or niche market players with interesting designs or claims on a novel path that might work.

Lost perhaps in the conversational exchange moving the health reform football forward is the net contribution to be realized via seasoned and risk savvy players who have demonstrated the value equation via their delivery systems albeit in the more familiar and perhaps safer turf of ‘Medicare Advantage’ and have chosen to sit on the sidelines or enter and exit the Pioneer program.

Simmering in the sea of competitive repositioning however in somewhat ‘semi-obscurity’ (perhaps stealth mode) are players who are emerging from the physician led, or preserving the independent practice of medicine model. Of late we’ve learned of the launch of Aledade, here and here, and today we witness the rather prominent bolstering via significant capital investment in Privia Health who’s ‘about’ content notes:

Privia builds and enables high-performance physician groups and clinically integrated provider networks – using technology, team-based care, and unique wellness programs to help leading doctors better manage the health of their populations.

So here we revisit the fundamentals of physician integration which is mission critical and the ultimate driver if the ACA is to work as envisioned. Physicians – traditionally averse to top down leadership especially when originated by health system or hospital executives – must aggregate into cohesive, seamless, coordinated nodes of care delivery to prudently purchase, deliver and thus restrain the ‘rapacious appetite’ of an institutionally driven healthcare [perhaps more aptly characterized as sick-care] industry drunk on a fee-for-volume paradigm.

When IPAs (independent practice associations) where first envisioned in the mid 70s and later amped up in the mid 80s to penetrate so-called mainstream medicine, the value prop was always to ‘preserve independent medicine’ while enabling participation in and thus positioning a ‘dog in the hunt’ for a market segment eagerly pursued by ‘bricks and sticks’ medical groups (primarily multi-specialty) who’s professional management correctly saw as a growing piece of the commercially insured (and later Medicare) pie.

The announcement by Privia Health today of a $400 million investment by ‘An investor group led by an affiliate of Goldman Sachs & Co.’ is in the words of an informed colleague aka @VinceKuraitis ‘could be a very BFD’.

As noted in the article above, Privia:

‘..markets itself as a platform for physicians to stay in private practice while becoming part of a larger network…’

Get to know these guys ASAP. We’ll be extending an invitation to their leadership to come tell the Privia Health story on ‘This Week in Accountable Care‘, and the details will be posted here upon confirmation.




Changing the Mythology of Hospital Led Value Based Purchasing

By William De Marco

William J. DeMarco | Pendulum HealthHospitals whose only product is acute care will have a difficult time managing in the post reform environment. Many hospitals have ventured into outpatient services competing with physicians. This has proven to be a mistake long term when seeking collaboration with physicians. Many hospitals do not understand how ACOs actually make money and have been so confused about managed care controlling their utilization and revenue that they believe this is the same strategy, yet it is not.

There are successful collaborations between hospitals and physicians such as Geisinger, Baylor (now Baylor Scott and White Heath) and Intermountain. There are also several new PHOs emerging as underlying structures to contract with the ACO. However, there are still traditional scenarios where the hospital runs it all and then the PHO becomes the HPO.

When starting an ACO there needs to be a separate corporation with physicians as major leaders, yet often times the hospital foots the bill for the startup and ends up feeling it is a disadvantaged partner because it is going to have its length of stay and admissions restricted. When the hospital pays for all the startup cost there is an expectation that these costs will be recovered when savings are created. This expectation can wipe out any bonus monies and if there is no bonus money earned the hospital is carrying this debt forward.

Both overspending a bonus or not earning a bonus will create major long lasting conflict for both parties and the finger pointing may last for years. This finger pointing is not just between the hospital and the physicians but sometimes between the physicians themselves, primary versus specialty, older doctor versus younger doctor, etc. If the hospital does not head this off immediately, the collaboration will be in trouble. Suddenly it is all about the bonus, but not really; it’s about how the physician feels he/she has been treated by the hospital. A fire begins burning that may never be quenched. Sometimes new managers being brought to hospitals report that the doctors do not trust them even though they never did anything to them.

The essential point being missed here is that when no one is held accountable, everyone can blame each other without consequence.

Using the joint venture organizational structure and a strategy that fits the marketplace there is a better chance to build a foundation for open cooperation and accountability and this does several things.

  1. Structure provides limits in terms of what powers or authority hospitals have over physicians in the relationship. This is reflected in the participation agreements and the board make up. There is an understanding that the hospitals will have the “physicians enforce physicians” rule and the hospital will run its own departments in accordance with the clinical guidelines that formulate part of the essential strategy to manage results that earn savings against the benchmark.
  2. Committees (several) hold the organization accountable for clinical guideline creation and enforcement. Non-compliant physicians may still practice at the hospital but they do not share the bonus unless they successfully correct their utilization issues. Several committees are required but we would add management, technology assessment, finance, and reimbursement committees to support the organization.
  3. While this list of committees can go on, I am constantly amazed when asking ACO executives what kind of bonus they are expecting under optimal conditions and I get a blank look.
  4. If no feasibility study has been done, two things will fall apart – the vision is tarnished because no one can articulate why they are doing this and the reimbursement sharing (if any) is left out until there is money on the table. And then the fight begins. Like a big family when a relative with money dies, it can be nasty. Those who put more money into the early investment (the hospital) want their cut.

If part of ownership by the physician included some money up front, with the hospital matching this amount with the understanding more dollars will come that, after expenses, can be divided in accordance with a schedule, this may be a start to fixing this problem. But nothing is simple here. It will get the physician’s attention to come to meetings if he/she want a return on investment and hospitals will reduce their risk by having to match what’s put up instead of putting all the money up. Perhaps a commercial loan for any additional money could be used to share the risk further. This may sound simple, but to not discuss the ins and outs of capital before getting started often leaves one partner holding the bag if the ACO should fail to produce savings.

Unifying the structure at the top and pushing down the accountability throughout the organization with delegated committee responsibilities and then supporting this with a capital plan to launch and divide rewards as earned avoids the PHO from becoming a HPO and unifies the medical and hospital staff around a common set of goals and vision that will likely lead to other joint ventures. Hospitals can form successful ACOs but must find that simple but effective way to form a true collaboration.

William DeMarco is President and CEO of DeMarco & Associates, Inc.  Mr. DeMarco created the firm based upon 20 years experience in health plan development and management, earning his credentials working with several community based health plans in the competitive St. Paul /Minneapolis marketplace. For more information see Pendulum Healthcare and follow on Twitter via @WJDeMarco

Tom Scully Tutorial & Diagnosis of Medicare Program

By Gregg A. Masters, MPH

washington journal scully on medicareAn excellent ‘tutorial’ of sorts on the Medicare program is provided by Tom Scully, former Bush era (2001-2004) administrator of the Centers for Medicare and Medicaid Services, who opines on the Medicare and Medicaid Acts of 1965.

He discusses President Lyndon Bain Johnson’s vision of the bill and looks at the present state of the program including his preference for ‘means testing’, the role of Medicare Advantage and issues associated with the expansion of Medicaid via the Affordable Care Act.

Scully also fires a shot over the bow of the The National Committee to Preserve Social Security and Medicare claim via ‘Top 10 Reasons Americans Love Medicare‘ questioning the relative ‘efficiency’ of the program compared to it’s commercial equivalents or fee-for-service (‘traditional’) Medicare.

7.  Medicare is efficient. Only 1% of traditional Medicare’s spending is overhead compared to 9% for private insurance and 6% for privatized Medicare (aka Medicare Advantage plans).

Scully notes:

Yeah, I think that’s completely and totally wrong… I’m trying not to be partisan and be objective on this. But look  Medicare is a wonderful program. It’s incredibly efficient….but basically what Medicare is it’s a single payer system where the Government pays every doctor in Toledo and every hospital the same thing. So the problem is as you have in any system – in the history of any economy in the world – when you fix prices, is volume…. so what you get is competition over volume….which is what they are incentivized to do…  

Regarding CMS, on the ‘efficiency’ claim Scully notes, perhaps in a moment of hyperbole:

I love CMS. The employees are great. They have no clue what’s going on in the healthcare system…it’s just by design that they don’t.

The video segment is courtesy of Washington Journal with original source link here. For a chronology of Medicare see: ‘Medicare Turns 48‘ courtesy of AARP.

For additional Scully insights see: ‘Care Innovation Summit: A Very Sober Assessment!

NOTE: If only Scully type rationality were native to the ‘don’t confuse me with facts’ oppositional Republican mindset of some these days, we’d be more about fixing problems than blame – just saying.

Key Steps to Successfully Implement Bundled Payment

By Gregg A. Masters, MPH

Are you tasked with ‘accountable care’ strategy, clinical integration or even business model innovation at your hospital, health system, medical group, practice or healthcare network?

Then you will be interested in this timely session on Bundled Payment.

Just consider the history (and on again off again promise) of bundling payment for healthcare services – which has a long one indeed. Recently and fueled by the passage of the Affordable Care Act (ACA) it’s value proposition and integration upside, bundled payment has been ‘re-discovered’.Richard Gilfillan MD

When you reflect on this discontinuous ‘timeline of consideration’ (from HCFA circa 1991 to CMS in 2011) of the role of bundled payment as viable health policy reform (regardless of political ideology), I can not escape connecting the dots between strategy and people. Here and perhaps not coincidentally linked is the Center for Medicare and Medicaid Innovation’s (CMMI) first director’s tenure and bundled payment DNA, i.e., Rick Gilfillan, MD who was/is intimately familiar with Geisinger’s ‘ProvenCare’ program – innovation in bundled payment and performance guarantees.

During an interview (see keynote here) I asked Dr. Gilfillan why so few have adopted the ProvenCare model to which he replied with some ‘angst’ –  I have no earthly clue (paraphrased).

In ‘Key Steps to Successfully Implement Bundled Payment’ courtesy of the Health Care Incentives Improvement Institute (HCI3) we are treated to a well detailed history, update and future promise of the renewed emphasis on bundling not just payment but also the underlying culture of collaboration the formula will require.

This program was recorded June 24th 2014 with Bailit Health Purchasing’s Michael Bailit and Marge Houy serving as principal faculty.



‘Eating Glass?': A DaVita Healthcare Partners Hiccup or Impending Physician Integration Implosion?

By Gregg A. Masters, MPH


When Modern Healthcare somewhat ‘matter of factually’ and rather tersely reported the sudden [unexpected?] change in C-suite leadership at the DaVita acquired foray into physician global medical risk management (i.e., Healthcare Partners) of Craig Samitt, MD, I wondered what back-story this announcement might portend? samitt to leave healthcare partners

DaVita the market leader in End Stage Renal Disease (ESRD) care and its articulate CEO Kent Thiry has been publically outspoken about having ‘overpaid’ for Healthcare Partners and rather aggressively warranting analysts on conference calls of no more hiccups in execution, i.e., those that were responsible are no longer with us (paraphrased).

This article appeared on July 18th, 2014. Twelve days later Modern Healthcare then reported ‘DaVita again lowers earnings projections for HealthCare Partners despite Q2 improvement‘, listen here.

Samitt has been a long term and visible player in risk savvy medical group culture as a thought leader and modeller of best practices at The Dean Clinic, see:How Dean Clinic Redesigned Primary Care‘, with previous stints at Fallon Clinic,  Harvard Pilgrim Healthcare and (Atrius Health founding member) Harvard Vanguard Medical Associates. In other words his ‘street cred’ in the integrated delivery system space was/is – well – impeccable.ACO Summit

I last saw Samitt at the ACO Summit in DC 2013 where he gave an excellent presentation on how Dean was bridging that elusive volume-to-value divide via incremental though progressive blended shifts in physician compensation from production to outcomes based incentives – including the underlying though mission critical enabling cultural shifts. Brilliant I thought! Just the ticket many will need to vision and implement the broad tenets of the Affordable Care Act, especially the likes of DaVita a best in Craig Samitt ACO Summit 2013class though single specialty services provider.

So when this abrupt and (short lived tenure) departure was announced, I found myself wondering what could possibly be wrong with this marriage? It just fits too well….

We shall see as more is revealed over time. I invite any of you with inside information to share what you know. Better yet, Craig can you willingly provide any perspective here?








Meet Redwood Community Care Coalition: A Health Center Nested ACO

By Gregg A. Masters, MPH

Wrapped in the ‘population health’ angle but clearly a unique play in the ACO space – at least from the participation point of view of Federally Qualified Health Centers (FQHC), former CEO Steve Ramsland (a 10% allocated FTE) addresses the audience about their market, approach to ACOs and the deployed healthIT spine (they use cClinical Works CCMR).

More information on Redwood Community Health is available here and via 2012 Annual Report. The ACO is an interesting construction of member entities up to and including ‘a doc in private practice’.Redwood Community Care Coalition ACO HealthIT

In the article noticing the Ramsland resignation – which is interesting on it’s face in terms of back-story if any, the service area for the FQHC includes:

…health centers in Marin, Sonoma, Napa and Yolo counties, including some of the largest FQHCs such as Petaluma Health Center, Marin Community Clinics, Clinic Ole in Napa and West County Health Centers in Sonoma County, among others.

The Redwood Community Care Coalition ACO is NOT aligned with a hospital partner, it is solely sponsored by its founding members.

Atul Gawande Opines on Post ACA Agenda

By Gregg A. Masters, MPH

‘The debate about whether to provide coverage for healthcare is over…’ Atul Gawande

I had a front row seat for this one at the 5th Annual (and last) ‘Health Datapalooza‘, a label affectionately coined by the former ‘athenista’ though always energetic and singularly determined Todd Park, U.S. Chief Technology Officer and Assistant to the President. Some pretty amazing insights from this public health sensitized and Harvard trained surgeon who’s simple proscription for checklists in hospital surgical suites has no doubt served the interests of many patients who may have otherwise been subject to an unacceptable pool of recurrent adverse hospital events, see: The Checklist Manifesto’.