‘Non-Profit IDNs': Where’s Da Beef?

By Gregg A. Masters, MPH

I have followed this narrative for quite some time albeit inside the industry contained debate of whether so-called ‘non-profit’ [501(c)3] hospitals or their parent systems (really more aptly characterized as “tax exempt”) actually earn this financial advantage via material ‘returns’ to the communities they serve.

NASI_Goldsmith studyAs can be expected you have the party line of the American Hospital Association (AHA) a trade group of predominantly non-profit members vs. that of it’s for-profit brethren The Federation of American Hospitals (FAH). You can guess which side of the argument each of them favor.

Now thanks to a recently published landmark study ‘Integrated Delivery Networks: In Search of Benefits and Market Effects’ by Healthcare Futurist Jeff Goldsmith, PhD et al, of the 501(c)3 cast of characters in the related but more often than not distinctly different ‘IDN culture’ we extend that line of inquiry into what has been a somewhat conversational ‘safe harbor of sorts’ – not any longer?

The Executive Summary notes both the rationale and basis to study the market ‘incident to’ a more focused pricing (via asset concentrations) power line of inquiry:

In January 2014, the National Academy of Social Insurance commissioned a study of the performance of Integrated Delivery Networks (IDNs), incident to its Study Panel on Pricing Power in Health Care Markets. The premise of this analysis was that any examination of the role that hospitals play in health care cost growth is complicated by the fact that in most large markets, the significant hospitals are part of larger, multi-divisional health enterprises. In these markets, hospitals may be part of horizontally integrated hospital systems operating multiple hospitals; vertically integrated health services networks that include physicians, post-acute services and/or health plans; or fully integrated provider systems inside a health plan (e.g. with no other source of income than premiums) like Kaiser Permanente. The latter two models are collectively labeled IDNs.

IDNs have very different stated purposes than mere collections of hospitals: to coordinate care across the continuum of health services and to manage population health. IDN advocates claim that these complex enterprises yield both societal benefits and performance advantages over less integrated competitors. The purpose of this analysis is to evaluate the evidence to support these claims.

And now for the less than surprising but wholly unacceptable answer albeit modestly caveatted by the limits of publically available information:

Despite more than 30 years of public policy advocacy on behalf of IDN formation, there is scant evidence in the literature either of measurable societal benefits from IDNs or of any comparative advantage accruing to providers themselves from forming IDNs. We have similarly found no such evidence in our analysis of 15 IDNs. Serious data limitations hamper anyone attempting to evaluate IDN performance based on publicly disclosed information. IDN financial disclosures obscure the operating performance of their hospitals and physician groups.

There does not appear to be a relationship between hospital market concentration and IDN operating profit [emphasis mine]. However, if the performance of the IDN’s flagship hospital is any indicator of overall systemic efficiency, the IDNs’ flagship hospital services appear to be more expensive, both on a cost-per-case and on a total-cost-of-care basis, than the services of its most significant in-market competitor.

This runs counter to the theoretical claim of IDN operating efficiency. Further, the flagship facilities of IDNs operating health plans or having significant capitated revenues are more expensive per case (Medicare case-mix adjusted) than their in-market competitors.

The authors would have greater confidence in these findings if they covered not only multiple years of information but also multiple institutions in the IDN portfolio (e.g. its suburban or rural hospitals, etc.). Further, the central question of whether IDNs have abused their market power in metropolitan markets can only be answered by examining actual service-specific payments to their hospitals by local health plans and by determining the profits generated by their hospital portfolio.

NASI_Goldsmith study_cohortI am struck by the reaction or better yet absence of a reaction in public discourse let alone in health wonk or big data evangelists circles particularly at time when there’s been so much mis-direction and battle fatigue surrounding the endless debate/efforts at repeal of the Affordable Care Act.

Such a profound observation and ‘counter intuitive’ result (i.e., ‘hey, there may not be a there, there insight’) based on frequent accolades and ‘innovation’ recognition extended to such trophy name plates as Kaiser Permanente, Geisinger Health, InterMountain Health and so little public debate (see complete list) causes me to question whether we’re paying attention to what matters?

How can we intelligently debate, discern and buildout the qualities and characteristics of financing and delivery system platform efficacy and business model innovation that delivers on the triple aim and lays a solid foundation for a sustainable healthcare economy if we do not understand their root DNA and the results (“community benefit”) they ostensibly generate?

Anyone?

Announcing the Launch of ‘PopHealth Week’

By Fred Goldstein

This week Gregg Masters (@2healthguru) and I (@fsgoldstein), along with Doug Goldstein (@eFuturist) are announcing the launch of PopHealth Week. This is a weekly Internet radio podcast (typically broadcast at 12 pm Eastern each David Nash MD MBAWednesday) with an associated website at www.pophealthweek.com. We intend to focus on all things population health. Our shows will feature 1) people, topics, news and analysis as we will 2) present the broad spectrum of what is and is not population health and 3) how it fits into the changing health and healthcare landscape, what’s working, how and by whom.

Our first show this Wednesday, May 20 will feature David Nash, MD, MBA, the Founding and Current Dean of the Jefferson School of Population Health. This show will focus on Population Health and Population Medicine.

The last Wednesday show each month will feature a roundtable discussion of recent news. So join Gregg, Doug and me as we discuss what’s happening in population health on May 27.

Coming up in June:

June 3jennifer-drago-feb-2013

Jennifer Drago, Executive Vice President of Population Health with Sun Health. Among her many jobs, Jennifer oversees the Care Transitions program which is a CMS Community-Based Care Transitions Program (CCTP), focusing on reducing readmissions, a major issue for hospitals, ACOs and other provider groups.

kaveh_safavi-21June 10

Kaveh Safavi, MD, Managing Director, Global Health, Industry Lead, Accenture. Discussing his thoughts on population health and where providers should be focusing early on.

June 17blumberg_steven

Steven Blumberg, Senior Vice President – AtlantiCare and Executive Director – AtlantiCare Health Solutions, an ACO in New Jersey discussing ACO’s.

June 24

Join Gregg , Doug and me as we monitor the pulse of the population health industry revealing its best practices and biggest challenges. We’ll help you sort out the ‘wheat from the chaff’ in this emerging space ripe with marketing claims while often light on documented use cases or outcomes efficacy.

More to come.

==##==

Fred Goldstein is the CEO of Accountable Health, LLC, and co-founder as well principal co-host of PopHealth Week. This post originally appeared on Accountable Health, LLC.

An ACO Update via Leavitt Partners

By Gregg A. Masters, MPH

Just released is the continuing pulse of the accountable care industry (not just ACOs per se) via the consulting firm branded with the imprimatur of a former Secretary of HHS Michael Leavitt who opines from the Red State of Utah on the progress made by market driven initiatives outlined leavitt_acosin the Patient Protection and Affordable Care Act (ACA).

I will add my thoughts to the Leavitt commentary shortly, but the one slide that caught my attention y/e 2014 was the crossover by provider type from physician led to institutionally (hospital system) led ACOs.

One might say that the traditional revenue side vs. cost basis of a hospital group is now at the head of the class of ACO innovation is the wrong form of ‘disruptive leadership’.

Yet, it’s interesting to note that the American Hospital Association (AHA) is a principal partner if not co-sponsor of the report. Might this be a filtering outcome of the ‘fox guarding the hen house‘ or even the aggregate impact (conscious or otherwise) of strategy driven choices by CEOs of U.S. Health Systems?

By way of context, as a long as hospitals maintain their ‘revenue center’ primacy vs, their actual role (in the sustainable healthcare ecosystem food chain) as the true ‘cost centers’ they are – at least in legally, financially and clinically integrated delivery systems or networks (IDNs), how can ‘hospital culture’ be expected to pro-actively cannibalize a bread-and-butter fee-for-services business model in a reimbursement paradigm largely dominated by volume driven incentives even in 2015? Only a disinterested third party (aka physician led ACOs) can re-engineer the needed disruption of maldistributed, asset concentrated overpriced hospital services.

For the complete Leavitt Partners report click here.

ACOs by sponsor type Leavitt Partners

The ‘NexGen ACO': CMS Speaks [again]

By Gregg A. Masters, MPH

At one level you have perhaps the most risk savvy and successful operators in the Medicare Advantage space aka ‘CAPG‘ (the California Association of Physician Groups) closely tethered to it’s less geographically constrained though California domiciled partner IHA as in ‘Integrated Healthcare Association’ explicitly advocating for the preservation of the Medicare Advantage program (MA) aka ‘Part C‘ even though the pre-ACA historical cost to the Medicare Trust fund ‘overfunded’ the program by 114% (estimated in 2014 at 106%) vs. historical FFS program payouts. CAPG’s value prop statement is in part reflected below:

Medicare Advantage is a critical element in the nation’s movement from volume to value in healthcare. With its emphasis on risk-based contracting and clinically integrated care, Medicare Advantage is paving the way for the advancement of coordinated care in every other healthcare program. Medicare Advantage has motivated the deployment of electronic medical records, the expansion of robust quality measurement and reporting, and the movement to team based care, all of which have resulted in better care for seniors. In addition to improving care and quality of life for seniors, this risk-based coordinated care model has the ability to rein in Medicare spending, unlike fee-for-service and its volume-driven incentives.

ACO Next Generation Model

Whereas, under the new if not ‘Deputy’ leadership since the departure of Marilyn Tavenner, former CMS Administrator, Patrick Conway, MD, recently announced the launch of a ‘new and improved’ ACO tagged the next generation ACO – which at some level may be virtually indistinguishable from it’s more mature MA program.

So the question remains, where is this program going and what if any difference will there be between Medicare Advantage and ‘Next Generation of ACOs?’

Quoting from CMS, the initiative details are:

The Next Generation ACO Model is an initiative for ACOs that are experienced in coordinating care for populations of patients. It will allow these provider groups to assume higher levels of financial risk and reward than are available under the current Pioneer Model and Shared Savings Program (MSSP). The goal of the Model is to test whether strong financial incentives for ACOs, coupled with tools to support better patient engagement and care management, can improve health outcomes and lower expenditures for Original Medicare fee-for-service (FFS) beneficiaries.

Included in the Next Generation ACO Model are strong patient protections to ensure that patients have access to and receive high-quality care. Like other Medicare ACO initiatives, this Model will be evaluated on its ability to deliver better care for individuals, better health for populations, and lower growth in expenditures. This is in accordance with the Department of Health and Human Services’ “Better, Smarter, Healthier” approach to improving our nation’s health care and setting clear, measurable goals and a timeline to move the Medicare program — and the health care system at large — toward paying providers based on the quality rather than the quantity of care they provide to patients. In addition, CMS will publicly report the performance of the Next Generation Pioneer ACOs on quality metrics, including patient experience ratings, on its website.

CMS expects approximately 15 to 20 ACOs to participate in the Next Generation ACO Model with representation from a variety of provider organization types and geographic regions. The Model will consist of three initial performance years and two optional one-year extensions. Specific eligibility criteria are outlined in the Request for Applications (PDF).

Clearly this may be an inflection point, or more aptly stated, a convergence of what has been a parallel track (excluding the Pioneer ACO program) between ACOs in the Medicare Shared Savings Program (aka ‘HMO-lite’) and their more risk savvy competitors in the MA space.

For a 2014 analysis of the costs of the Medicare Advantage vs. traditional Medicare program see: ‘Medicare Advantage Program in 2014‘.

As tweeted to me earlier this week by James Hansen, VP of the ACO and MA operator company Lumeris:

‘Next generation ACO, finally a starter or more kissing your cousin?’

No doubt CMS is being responsive to provider (contractor) market input from both the Pioneer program exits as well as the overwhelming election by ACOs to NOT assume downside risk under the current terms of the MSSP.

Like it or not, [ACO/HMO] convergence is coming. Clinical and financial integration including partial or full risk assumption are the business models that will succeed in the pursuit of sustainable healthcare financing and delivery business models. I view this latest CMS announcement as confirmation of this macro directional trend.

 

 

 

 

 

 

Vetting the ACA’s Impact on Health Insurance Operators

by Gregg A. Masters, MPH

Milliman Health 2013 Briefing Paper ACA ResultsIn contrast to the comprehensive ‘go live’ implementation of ‘RomeyCare’ in the Commonwealth of Massachusetts, the phased (and some would say diluted if not ‘fatally’ compromised) implementation of the Affordable Care Act (ACA) has been muted via a staggered on-boarding schedule of its various component parts and further selectively waived or delayed provisions primarily for political considerations.

Yet, we’re now some 3 1/2 years since enactment of the spirit of the ACA in March of 2010. One of the arguably principal accountability players to advise, measure, and report on the success or failure of the Act’s specific provisions are the good folks at Milliman Health – principal ‘actuaries to the stars’ of sorts.

Milliman often consults on the front end of risk assumption, mitigation – if not avoidance – in the shift from volume-to-value. They also measure and monitor the aggregate performance of the law based on their access to propriety client derived data sets, those residing in the public domain as well as tapping secondary sources in the market place as proxies.

Recently Milliman issued the Briefing Paper: ‘2013 Commercial Health Insurance – Overview of Financial Results’ wherein the report notes:

‘With the Patient Protection and Affordable Care Act (ACA) enactment in March of 2010, health insurers have had to comply with minimum loss ratio requirements, more stringent rate reviews, removal of annual benefit limits, first dollar coverage of preventive care, and other requirements. The insurer experience for 2013 reflects the third year insurers have been required to comply with minimum loss ratio requirements. Additionally, 2013 marks the final year that medical underwriting was not prohibited for new business in the individual and small group comprehensive health insurance markets in many states. Therefore, 2013 commercial health insurance can be used to both evaluate the impact of ACA reforms that were implemented prior to 2013, as well as serve as a benchmark to evaluate insurer financial results moving forward’.

Suffice it to say, there is more meat in the report sourced from various indicia of market performance, but witness the Milliman general conclusion noting:

Milliman  Health Breifing Paper on ACA Results 2010 - 2013

The report provides ‘an overview of health insurer financial results in 2013 and evaluated changes in the health insurance industry’s expense structure and profitability from 2010 to 2013, including changes in the medical loss ratio.’ 

The report’s conclusions are rather instructive and a testimonial of how imposing ‘order’ (or some degree of plan standards and thus comparability to an arguably cowboy market – primarily the individual insurance domain) – has impacted the operations of market participants.

Basically, Milliman is saying some patterns can be more clearly discerned (in group market) while in truth there are too many moving parts and it’s perhaps to early to tell at least in the individual market.

For complete report access click here.

Comment

It remains to be seen how the political theater if not continuing litigious climate will impact the future performance of this initially proffered conservative health policy ideology muscled only into law via straight party line voting. The complexity of our healthcare system is such that any material effort to arrest, mitigate and redirect its underlying healthcare economics will be met with special interest agenda driven resistance if not outright mass public deception.

So in the spirit of the 70s rock band Kansas viaCarry on my wayward son‘, lets be mindful of the timeless advice of Mr. Rogers offered during times of deep national tragedy:

Look for the helpers. You will always find people who are helping.’ ~ Frederick “Fred” McFeely Rogers

 

ACO Alignment Summit

by Gregg A. Masters, MPH

Day one of the ACO Alignment Summit kicked off in Alexandria, Virginia with excellent presentations from Diwen Chen, Executive Director, Payment Innovation and Accountable Care, Dignity Health, and Michael Donahue, MBA, Vice President, Network Development and ACO Activities for Eastern Maine Healthcare System (EMHS).Dignity Health

Dignity Health a hospital system founded in 1986 with 38 hospitals is the fifth (5) largest hospital provider in the nation and the largest non-profit health system in California. Dignity Health operates 32 facilities in California, with three (3) in Arizona and three (3) in Nevada. The Dignity Health system medical staff boasts 9,000 affiliated physicians, and 500,000 members via four sponsored health plans.

EMHS Eastern Main Healthcare System (EMHS) is a regional integrated delivery system serving all of central, eastern, and northern Maine. Beacon Health, LLC is the organizational model which supports EMHS’ designation as a Pioneer Accountable Care Organization.

Beacon Health, LLC is one of the remaining 19 Pioneer ACOs piloting a program designed to improve the coordination, efficiency, effectiveness, quality, and cost of healthcare.

[NOTE: For more information see: EMHS Beacon Health Pioneer Accountable Care Organization.]

ACOs are key drivers implementing the ‘triple aim’ vision of the Affordable Care Act.  At core the intention is to improve the care delivered to Medicare patients, while transforming the overall healthcare delivery system from volume to value. EMHS deploys approximately 8,000 people in this transformative commitment to accountable care.

According to CMS Beacon Health, LLC experienced the following since admission to the program:

Performance Year 1 (2012): Gross Savings  5.0%

Performance Year 1 (2012): Gross Savings $4.05 Mil

Performance Year 1 (2012): Earned Shared Savings Payments $2.03 Mil

Performance Year 2 (2013): Gross Savings 5.6%

Performance Year 2 (2013): Gross Losses  $-6.26 Mil 

Performance Year 2 (2013): Earned Shared Savings Losses3 $-2.89 Mil 

A limited recap of the day’s presentation highlights is below:

The twitter transcript is herethe updated analytics report here and dashboard here. Reach analytics for Day 1 are pasted below:

Analytics Day 1 ACO Alignment Summit