The introduction of "accountable care organizations" in the health reform law allows Medicare to provide incentives for healthcare providers to lower costs, raise quality of care and improve efficiency at their organizations. The idea is simple: If physicians and hospitals worked together to prevent readmissions, duplicate tests and other unnecessary costs, healthcare would be cheaper and safer.
In order to qualify as an ACO, an organization must:
1. Have a formal legal structure to receive and distribute shared savings.
2. Have at least 5,000 beneficiaries.
3. Participate in the program for at least three years.
4. Have sufficient information on participating ACO healthcare professionals.
5. Have a leadership and management structure that includes clinical and administrative systems.
6. Have defined processes to promote evidence-based medicine, report data to evaluate quality and cost measures and coordinate care.
7. Demonstrate that it meets patient-centered criteria.
Anne McGeorge, national managing partner of Grant Thornton's healthcare industry practice, discusses five things hospitals can do to prepare for accountable care organizations.
1. Align with physicians. Ms. McGeorge says healthcare organizations must take proactive steps to ensure they are completely aligned with their physician population. In order to do this, organizations need to evaluate their compliment of physicians and determine if they are prepared to become an ACO. If not, they may need to recruit physicians, especially primary care physicians, as well as specialists in order to create and maintain an effective ACO.
"Hospitals need to collaborate with physicians so they understand what's coming down the pipe and understand the concept behind ACOs," she says. "The thinking is that reimbursement will be targeted toward incenting quality outcomes rather than each procedure. So hospitals and physicians will need to collaborate and think through how they can work together to meet those requirements."
ACOs will make the need for PCPs greater than ever before. According to Ms. McGeorge, many medical schools are currently offering incentives in the form of student loans and scholarships to encourage students to pursue primary care. "The way ACOs are going to work, primary care physicians will likely be the first contact of care with the patient and they will help coordinate other specialists as needed," says Ms. McGeorge. "Collaboration between healthcare organizations and PCPs will be important."
2. Perform a thorough self-assessment of your efficiencies of process and cost. In order to qualify for reimbursements, your hospital will have to provide data about its’ costs and quality. In order to start making changes, your facility should take a good look at its current processes and figure out how they can be improved. This could mean streamlining operations, reducing expenses, reducing hospital admissions and avoiding duplicate tests. For example, if your ER is frequently being used for routine care, you could set goals to reduce routine care admissions through preventative care, patient education and building a relationship between a patient and a primary care provider.
Physicians could also be incented to streamline costs by reducing the use of high dollar technology, including CT scans, PET scans and MRIs. "We're incenting physicians to utilize those machines, and they get paid more every time they order a test," says Ms. McGeorge. "If you incent them on the reduction of tests, you incent the right behavior and force physicians to use the technology in a more efficient manner."
With a continued increased focus on efficiency, Ms. McGeorge says every department will have incentives on how to deliver care more efficiently. Orthopedics, for example, might be incentivized to use physician assistants, who can see the less severe injuries, thereby avoiding high cost visits to the orthopedist. If some patients can be taken care of by their primary care provider, or even physician assistants or physician extenders, the cost of providing care will be reduced.
3. Promote quality rather than volume. Ms. McGeorge recommends aligning your incentives toward the efficient delivery of care rather than simply focusing on the number of procedures a physician can perform. You could take a look at avoidable admissions — admissions related to conditions that are chronic but not fatal — and set goals for the reduction of those admissions through preventative care and patient education. Promoting quality care will also require you to upgrade your clinical systems, Ms. McGeorge says. If you want to track your progress and benchmark your organization against itself and other organizations across the country, you need a system that can track the different metrics you want to focus on and show you data across time.
4. Ensure your IT systems can capture required data. Simply stated, your existing systems may not be sufficient to capture the information required by ACOs and upgrades to your IT systems may be necessary. Systems will now need to track metrics which will ultimately help to evaluate physicians. You can't measure quality without being able to collect data over time, Ms. McGeorge says. You need a system that can track admissions, number of tests referred, infection rates, patient falls and other data that you can use to promote safety. "For example, if you want to reduce avoidable admissions, you need a system that can track admissions and notice when a patient gets admitted to the hospital with a mild heart condition that could be prevented by visiting a primary care doctor," she says.
5. Negotiate with insurance companies. If hospitals focus on keeping patients healthy so they don't need to come to the hospital, they will most likely lose money in favor of improving patient health and quality of care. In order to make up some of those financial losses, hospitals should use their leverage with private insurance companies to negotiate higher reimbursements. "You should be able to say, 'If we put this system in place and eliminate a procedure that you would have reimbursed us $15,000 for a hospital stay before, you need to share some of those savings with us,'" Ms. McGeorge says. Since the insurance companies will benefit by paying lower amounts to hospitals, they "have to be part of this," she says.
Starting in Jan. 2011, the Center for Medicare and Medicaid Innovation will look at individual plans and payment reform and decide how the government will incentivize promoting quality over quantity. Ultimately, hospitals may be able to even out their costs through additional reimbursements from Medicare and Medicaid, savings from insurance companies and overall efficiencies. The end goal, of course, is to improve quality and lower the overall cost of healthcare in the U.S., and ACOs could be a first step.
Read more about Grant Thornton.
In order to qualify as an ACO, an organization must:
1. Have a formal legal structure to receive and distribute shared savings.
2. Have at least 5,000 beneficiaries.
3. Participate in the program for at least three years.
4. Have sufficient information on participating ACO healthcare professionals.
5. Have a leadership and management structure that includes clinical and administrative systems.
6. Have defined processes to promote evidence-based medicine, report data to evaluate quality and cost measures and coordinate care.
7. Demonstrate that it meets patient-centered criteria.
Anne McGeorge, national managing partner of Grant Thornton's healthcare industry practice, discusses five things hospitals can do to prepare for accountable care organizations.
1. Align with physicians. Ms. McGeorge says healthcare organizations must take proactive steps to ensure they are completely aligned with their physician population. In order to do this, organizations need to evaluate their compliment of physicians and determine if they are prepared to become an ACO. If not, they may need to recruit physicians, especially primary care physicians, as well as specialists in order to create and maintain an effective ACO.
"Hospitals need to collaborate with physicians so they understand what's coming down the pipe and understand the concept behind ACOs," she says. "The thinking is that reimbursement will be targeted toward incenting quality outcomes rather than each procedure. So hospitals and physicians will need to collaborate and think through how they can work together to meet those requirements."
ACOs will make the need for PCPs greater than ever before. According to Ms. McGeorge, many medical schools are currently offering incentives in the form of student loans and scholarships to encourage students to pursue primary care. "The way ACOs are going to work, primary care physicians will likely be the first contact of care with the patient and they will help coordinate other specialists as needed," says Ms. McGeorge. "Collaboration between healthcare organizations and PCPs will be important."
2. Perform a thorough self-assessment of your efficiencies of process and cost. In order to qualify for reimbursements, your hospital will have to provide data about its’ costs and quality. In order to start making changes, your facility should take a good look at its current processes and figure out how they can be improved. This could mean streamlining operations, reducing expenses, reducing hospital admissions and avoiding duplicate tests. For example, if your ER is frequently being used for routine care, you could set goals to reduce routine care admissions through preventative care, patient education and building a relationship between a patient and a primary care provider.
Physicians could also be incented to streamline costs by reducing the use of high dollar technology, including CT scans, PET scans and MRIs. "We're incenting physicians to utilize those machines, and they get paid more every time they order a test," says Ms. McGeorge. "If you incent them on the reduction of tests, you incent the right behavior and force physicians to use the technology in a more efficient manner."
With a continued increased focus on efficiency, Ms. McGeorge says every department will have incentives on how to deliver care more efficiently. Orthopedics, for example, might be incentivized to use physician assistants, who can see the less severe injuries, thereby avoiding high cost visits to the orthopedist. If some patients can be taken care of by their primary care provider, or even physician assistants or physician extenders, the cost of providing care will be reduced.
3. Promote quality rather than volume. Ms. McGeorge recommends aligning your incentives toward the efficient delivery of care rather than simply focusing on the number of procedures a physician can perform. You could take a look at avoidable admissions — admissions related to conditions that are chronic but not fatal — and set goals for the reduction of those admissions through preventative care and patient education. Promoting quality care will also require you to upgrade your clinical systems, Ms. McGeorge says. If you want to track your progress and benchmark your organization against itself and other organizations across the country, you need a system that can track the different metrics you want to focus on and show you data across time.
4. Ensure your IT systems can capture required data. Simply stated, your existing systems may not be sufficient to capture the information required by ACOs and upgrades to your IT systems may be necessary. Systems will now need to track metrics which will ultimately help to evaluate physicians. You can't measure quality without being able to collect data over time, Ms. McGeorge says. You need a system that can track admissions, number of tests referred, infection rates, patient falls and other data that you can use to promote safety. "For example, if you want to reduce avoidable admissions, you need a system that can track admissions and notice when a patient gets admitted to the hospital with a mild heart condition that could be prevented by visiting a primary care doctor," she says.
5. Negotiate with insurance companies. If hospitals focus on keeping patients healthy so they don't need to come to the hospital, they will most likely lose money in favor of improving patient health and quality of care. In order to make up some of those financial losses, hospitals should use their leverage with private insurance companies to negotiate higher reimbursements. "You should be able to say, 'If we put this system in place and eliminate a procedure that you would have reimbursed us $15,000 for a hospital stay before, you need to share some of those savings with us,'" Ms. McGeorge says. Since the insurance companies will benefit by paying lower amounts to hospitals, they "have to be part of this," she says.
Starting in Jan. 2011, the Center for Medicare and Medicaid Innovation will look at individual plans and payment reform and decide how the government will incentivize promoting quality over quantity. Ultimately, hospitals may be able to even out their costs through additional reimbursements from Medicare and Medicaid, savings from insurance companies and overall efficiencies. The end goal, of course, is to improve quality and lower the overall cost of healthcare in the U.S., and ACOs could be a first step.
Read more about Grant Thornton.