ACOs: A promising report ‘from the front’ via IOM

By Gregg A. Masters, MPH

The prevailing sentiment towards ACOs in the market today can be grossly divided somewhere between the skeptic camp perhaps most gently represented by the oft quoted ‘unicorn’ attribution, credited to Mark Smith, MD, MBA, President and CEO of the California Healthcare Foundation:

The accountable care organization is like a unicorn, a fantastic creature that is vested with mythical powers. But no one has actually seen one.

And the ‘bullish’ camp, aka ACO evangelistas, more often than not associated with the proponent think tanks of ACOs including Don Berwick, MD, both at IHI (and a brief but productive tenure as Administrator at CMS), and Elliott Fisher, MD, et al, perhaps best framed as ‘faith based’ expectations to tame the beast, though ‘on the come’. This cautious optimism was tempered in part by decades of failure and the mixed results reported in 2011 by the Physician Group Practice demonstration project, see: “Lessons from the Physician Group Practice Demonstration — A Sobering Reflections.”

Which is why the recent IOM Report, titled: ‘A Path to Accountable Care‘ a report from the front if you will, is so welcome and timely. It puts meat on the faith based bone of whether ACOs can actually deliver on the promise of the ‘triple aim.’

What’s critical here is the level of stakeholder engagement to structure a proactive partnership from payor, to institutional provider, and participating medical groups. All of the principals are mature managed care players in their own right including Blue Shield of CaliforniaDignity Health (formerly Catholic Healthcare West), and Hill Physicians Group.

According to Bodaken: ‘Dignity Health, Hill Physicians Group, and Blue Shield launched the pilot with the California Public Employees’ Retirement System (CalPERS) in January 2010. The pilot covered more than 40,000 Blue Shield members assigned to Hill in the greater Sacramento region. This represented about 75 percent of the CalPERS member population and accounted for about 75 percent of all dollars being spent for hospital services in the Sacramento area.’

To quote key summary metrics from the study:

By the end of the year, the collaboration achieved $15.5 millionin savings, which translated to no premium increase for CalPERS members in 2010. The savings largely resulted from a 15 percent reduction in inpatient readmissions and a 15 percent reduction in inpatient days utilized. Further, inpatient stays of 20 or more days were reduced by 50 percent. These, of course, tended to be catastrophic cases and often the most expensive hospital costs per day.

The foundation for these results is a three-way risk arrangement that plays a key role in keeping the parties aligned. The arrangement puts each party at financial risk for meeting per-member, per-month (PMPM) cost targets spanning institutional, professional, pharmacy, and ancillary services. Since each party has both upside and downside potential for health care expenditures, each is incentivized to cooperate rather than compete for revenue.

Ok folks, so we’ve spotted one (ah hem, a unicorn), and go figure it’s not Kaiser, Geisinger, nor Mayo – the usual suspects. Perhaps more striking is that fact that the arrangement is of all things a community based ‘network model’ of accountable care with rather impressive metrics and real world impact. The caveat then is that all healthcare is local, and it just so happens that all of the principals in this conversation are proactive, seasoned, and risk savvy players, not necessarily ingredients that you will find in Atlanta, Austin or Anchorage per se.

None-the-less, a hat tip to Bruce Bodaken, President and CEO of Blue Shield of California (@blueshieldca), Darryl Cardoza, CEO and Steve McDermott (former CEO), of Hill Physicians , and Lloyd Dean, President & CEO, and the good sisters at Dignity Health (@dignityhealth), fka Catholic Healthcare West, for their steady hands, vision and demonstrated leadership. You collectively represent:

a force of nature, vs. the feverish clod of grievances and ailments complaining that the world will not devote itself to making you happy.


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