Accountable care will require hospitals and physicians to work collaboratively to improve the clinical process and make care more efficient (and less costly). To accomplish this there will need to be shared leadership with, perhaps, more control in the hands of physicians. Don't underestimate the huge paradigm shift this will require.
Hospitals will rely on their employed physician networks for the backbone of their ACO and very few of these networks have mature physician governance structures. Add to this a mix of private practices with little or no formal management structures and you may well end up with a ship that can't sail.
How do you get from this problematic environment to Hakuna Matada ("no worries")? Lots of trial and error. Recently two clients started down the bonding road only to discover major potholes. The process of ceding leadership to physicians almost derailed both. One client decided to ignore the need for robust physician involvement and took on a risk contract without first addressing data issues, clinical process improvement, and cost of care analysis. Are you shocked to learn that the outcome wasn't pretty?
Before you decide to begin developing your ACO take the time needed to work with the folks on the other side of the table (hospital or physician leadership) and work through control concerns and perceived threats. Creating the vision is the easy part. Making that vision a reality takes hard work.
Tuesday, November 30, 2010
Tuesday, November 23, 2010
Is Accountable Care Really Healthcare Reform?
Some years ago I taught a course called Financing Healthcare and I took great pleasure in shattering my idealistic students’ thoughts that there was some grand design behind the American health care system. By the end of the semester they were agreeing that what we had was a result of financial incentives. Form follows dollars. While I try not to live too much in the past this experience raises the question; “is accountable care really healthcare reform or payment reform”. My bias is for the latter.
Few will argue that we must address the issue of the cost of care. Workers are being asked to pay an ever-increasing share of their medical benefits, companies are struggling to even provide health benefits, and Medicare will be bankrupt in not too many more years unless something drastic is done. If we can’t shift more costs to works and employers are unable or unwilling to cover a larger share of the costs, and politicians are not prepared to cut the benefits promised to our seniors then what is the alternative? Make cuts look like a new approach to care.
Capitation is not new. It’s been around for decades and it works. Care gets managed. The problem is that for capitation to work there has to be rules that require patients to see certain doctors, limits on what services are covered, and penalties for those that don’t comply.
Accountable care is Global Capitation. A fixed amount is meant to cover all the care needed by a specific group. Unfortunately the models that are being considered allow patients to “leak” out of the program, like a PPO. This risks the very concept of managing care. Patients will always opt for freedom of choice (think about the popularity of gatekeeper HMOs).
Before you rush to create or join an Accountable Care organization consider the significant financial risks if your patient population can seek care outside the collaborative network and you then need to pay the bill. We need accountable care (or whatever you want to call it) if we want affordable care but we need to “get real” and understand that lower cost results from tighter control of the care process. Be vocal if you see model proposals that put all the risk on you.
Few will argue that we must address the issue of the cost of care. Workers are being asked to pay an ever-increasing share of their medical benefits, companies are struggling to even provide health benefits, and Medicare will be bankrupt in not too many more years unless something drastic is done. If we can’t shift more costs to works and employers are unable or unwilling to cover a larger share of the costs, and politicians are not prepared to cut the benefits promised to our seniors then what is the alternative? Make cuts look like a new approach to care.
Capitation is not new. It’s been around for decades and it works. Care gets managed. The problem is that for capitation to work there has to be rules that require patients to see certain doctors, limits on what services are covered, and penalties for those that don’t comply.
Accountable care is Global Capitation. A fixed amount is meant to cover all the care needed by a specific group. Unfortunately the models that are being considered allow patients to “leak” out of the program, like a PPO. This risks the very concept of managing care. Patients will always opt for freedom of choice (think about the popularity of gatekeeper HMOs).
Before you rush to create or join an Accountable Care organization consider the significant financial risks if your patient population can seek care outside the collaborative network and you then need to pay the bill. We need accountable care (or whatever you want to call it) if we want affordable care but we need to “get real” and understand that lower cost results from tighter control of the care process. Be vocal if you see model proposals that put all the risk on you.
Saturday, November 20, 2010
What Do Accountable Care Organizations And New Cars Have In Common?
If you were in the market for a new car would you simply walk on the lot and sign the papers? Doubtful. You would likely take your choice for a test drive, maybe read some reviews, and see if the features match your needs. What has this got to do with ACOs?
Recently I got a call from a health system that said they had already done a readiness assessment and a feasibility study and were ready to form an ACO. Since we really don't know what an ACO will look like until federal regulations are released and comments are returned I'm uncertain how these folks could have done a feasibility study. Using the large managed care networks in California as a model may be a big mistake. They are ready to buy their car with little or no understanding of what the car is supposed to do for them or how it runs.
The message in this is "don't rush to market until you know what the market requires". We suggest that you learn to walk first and this might include select DRGs or procedures that might be trails for hospitals and physicians to streamline and coordinate care. see how that goes before you take on 5,000 new patients.
A client earlier this year was thrilled that they negotiated a global capitation contract with their local BCBS plan. They were convinced that their 5 hospitals and 500 physicians were on their way to the bank. They, unfortunately, ignored the fact that their data system environment was uncoordinated, that their physicians did not exhibit the most cost effective care patterns, and that they really had no firm idea of what care actually cost. The shocking outcome was that the deal was a formula for financial losses. Surprise!
If you have done a readiness assessment have someone check your work. Have you really come to terms with this hospital/physician integration thing? Do you really know where you stand relative to best clinical practices?
Our opinion is that the ACO delivery model is coming but it is still too early to take on risk in an environment of uncertainty. This certainly does not mean "do nothing". Begin the assessment and learning process so that you'll be ready to act when the picture becomes more clear.
Recently I got a call from a health system that said they had already done a readiness assessment and a feasibility study and were ready to form an ACO. Since we really don't know what an ACO will look like until federal regulations are released and comments are returned I'm uncertain how these folks could have done a feasibility study. Using the large managed care networks in California as a model may be a big mistake. They are ready to buy their car with little or no understanding of what the car is supposed to do for them or how it runs.
The message in this is "don't rush to market until you know what the market requires". We suggest that you learn to walk first and this might include select DRGs or procedures that might be trails for hospitals and physicians to streamline and coordinate care. see how that goes before you take on 5,000 new patients.
A client earlier this year was thrilled that they negotiated a global capitation contract with their local BCBS plan. They were convinced that their 5 hospitals and 500 physicians were on their way to the bank. They, unfortunately, ignored the fact that their data system environment was uncoordinated, that their physicians did not exhibit the most cost effective care patterns, and that they really had no firm idea of what care actually cost. The shocking outcome was that the deal was a formula for financial losses. Surprise!
If you have done a readiness assessment have someone check your work. Have you really come to terms with this hospital/physician integration thing? Do you really know where you stand relative to best clinical practices?
Our opinion is that the ACO delivery model is coming but it is still too early to take on risk in an environment of uncertainty. This certainly does not mean "do nothing". Begin the assessment and learning process so that you'll be ready to act when the picture becomes more clear.
Thursday, November 4, 2010
Does the election mean that "Reform" is dead?
As the dust begins to settle after the election it is only reasonable to question if the recent reform legislation will be repealed as many of the newly elected legislators have promised. If not repeal then what?
An interesting survey was published a month or so before the election but it didn’t get much visibility. The survey looked at opposition to the healthcare reform legislation and, while it found that a majority of those responding were opposed it went a bit further and found that many of those opposed felt that the law didn’t go far enough. What this means is that there is still significant support for changing the system within which we exist.
So, back to the original question: What will happen? The President has already gone on record of drawing a line on his healthcare initiative, he’s not willing to negotiate reform. We believe that the greatest focus of opposition is the coverage mandate. When you read the law the requirements for small and medium size business are expensive and the alternatives for those covered are not all good. We think that universal coverage will be back on the table.
It appears that the Senate will remain Democratic but there may be some willingness on the part of worried Senators to negotiate some changes with the Republican opposition.
One thing that both consumers and employers can agree on is the cost of care. It is too high (let’s ignore the fact that we are essentially getting what we demand…that’s for another day). As we have stated before this means that costs need to be controlled, which translates to utilization needs to be controlled, which means that Accountable Care is likely to be alive and well. We might see a delay in the Medicare initiatives but we don’t think that incentives for integration of physicians and hospitals will go away.
Approximately 60 House seats have changed hands. This means that there will be a learning curve period as these new folks deal with the fact that they now Chair many of the committees and that they don’t even know how to find the rest rooms. This means a period of inaction for the next six months so don’t look for dramatic shifts in policy or direction. We will likely see a set of proposed regulations, based on the current law, before congress takes up the issue. We can safely assume that many of the provisions of those regulations are DOA but we need to go through the process.
Our basic message is that Integration makes sense. It will drive cost containment and both parties will need to continue to address this issue if they want to get reelected. Don’t lose sight of the need to plan for this and, while we may be more than 24 months away we can expect progress before the next election. We can assume the President likes his job and will keep this before the public.
An interesting survey was published a month or so before the election but it didn’t get much visibility. The survey looked at opposition to the healthcare reform legislation and, while it found that a majority of those responding were opposed it went a bit further and found that many of those opposed felt that the law didn’t go far enough. What this means is that there is still significant support for changing the system within which we exist.
So, back to the original question: What will happen? The President has already gone on record of drawing a line on his healthcare initiative, he’s not willing to negotiate reform. We believe that the greatest focus of opposition is the coverage mandate. When you read the law the requirements for small and medium size business are expensive and the alternatives for those covered are not all good. We think that universal coverage will be back on the table.
It appears that the Senate will remain Democratic but there may be some willingness on the part of worried Senators to negotiate some changes with the Republican opposition.
One thing that both consumers and employers can agree on is the cost of care. It is too high (let’s ignore the fact that we are essentially getting what we demand…that’s for another day). As we have stated before this means that costs need to be controlled, which translates to utilization needs to be controlled, which means that Accountable Care is likely to be alive and well. We might see a delay in the Medicare initiatives but we don’t think that incentives for integration of physicians and hospitals will go away.
Approximately 60 House seats have changed hands. This means that there will be a learning curve period as these new folks deal with the fact that they now Chair many of the committees and that they don’t even know how to find the rest rooms. This means a period of inaction for the next six months so don’t look for dramatic shifts in policy or direction. We will likely see a set of proposed regulations, based on the current law, before congress takes up the issue. We can safely assume that many of the provisions of those regulations are DOA but we need to go through the process.
Our basic message is that Integration makes sense. It will drive cost containment and both parties will need to continue to address this issue if they want to get reelected. Don’t lose sight of the need to plan for this and, while we may be more than 24 months away we can expect progress before the next election. We can assume the President likes his job and will keep this before the public.
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