Nancy J. Ham, president & CEO of MedVentive in Waltham, Mass., has more than 10 years experience preparing hospitals to launch ventures coordinating care with physicians and other providers. Lately much of her time is taken up with helping hospitals start accountable care organizations and similar ventures. Speaking at the National Accountable Care Organization Congress in Los Angeles, she offered eight specific ways to launch and run an ACO without losing money.
1. Squeeze funds out of your existing budget. An ACO takes a great deal of investment to get started, but there are ways to keep from borrowing all of it. "You can find lots of money in internal operations," Ms. Ham says. In one project she was involved in, the organization freed up $1 million by using existing funds in its budget. "You can find money just by focusing on your own shop," she says.
2. Seek funding from payors. For example, if the organization is starting a management services organization with physicians, the payor can cover one-third of MSO functionality. Payors can also provide clinical data that will be crucial to the success of the ACO.
3. Focus heavily on contracts. Negotiating successful contracts with private payors for coordinated care requires more sophisticated skills than for fee-for-service contracts. To make sure your contract will be feasible, invest in actuarial underwriting and negotiating expertise. "It will be the best money you can spend," Ms. Ham says. If the contracts are not favorable, all high quality and efficiency in the world won’t matter.
4. Invest sufficiently in IT. Since success depends on intensively analyzing data, healthcare IT is crucial. "A data warehouse is just the beginning," Ms. Ham says. "You need tools to analyze the data." With so many functions — from compiling clinical data to paying claims for referrals, to analyzing cost and utilization — the ACO will need several systems. One particular IT system won’t be enough.
5. Take insurance risk for pharmacy. Accepting capitated payments for some services can yield greater income than simply getting fee-for-service payments enhanced by payments for shared savings. A good place to start is pharmacy, where savings can be quite substantial, Ms. Ham says.
6. Contract directly with employers. Cutting out the health insurance middleman and dealing directly with employers means more savings are put into the providers' pockets. Ms. Ham is working on such arrangements with a provider organization in Indiana.
7. Investigate extra expenses. If a certain physician's patients are more costly, you need to know exactly where the higher costs are coming from and how this is occurring. For example, if a high number of a primary care physician's patients are going to the ED, office hours may be too limited or the office is not effectively answering patients' calls.
8. Train physicians on stopping patient leakage. A lot of money is lost when patients go to big tertiary care centers rather than the ACO's own providers. To stem this leakage, train your primary care physicians on how to have a conversation with patients who want to go somewhere else. This involves showcasing sophisticated services within the organization. One organization used a psychologist to coach physicians on how to pitch this to patients, Ms. Ham says.
Learn more about MedVentive.
1. Squeeze funds out of your existing budget. An ACO takes a great deal of investment to get started, but there are ways to keep from borrowing all of it. "You can find lots of money in internal operations," Ms. Ham says. In one project she was involved in, the organization freed up $1 million by using existing funds in its budget. "You can find money just by focusing on your own shop," she says.
2. Seek funding from payors. For example, if the organization is starting a management services organization with physicians, the payor can cover one-third of MSO functionality. Payors can also provide clinical data that will be crucial to the success of the ACO.
3. Focus heavily on contracts. Negotiating successful contracts with private payors for coordinated care requires more sophisticated skills than for fee-for-service contracts. To make sure your contract will be feasible, invest in actuarial underwriting and negotiating expertise. "It will be the best money you can spend," Ms. Ham says. If the contracts are not favorable, all high quality and efficiency in the world won’t matter.
4. Invest sufficiently in IT. Since success depends on intensively analyzing data, healthcare IT is crucial. "A data warehouse is just the beginning," Ms. Ham says. "You need tools to analyze the data." With so many functions — from compiling clinical data to paying claims for referrals, to analyzing cost and utilization — the ACO will need several systems. One particular IT system won’t be enough.
5. Take insurance risk for pharmacy. Accepting capitated payments for some services can yield greater income than simply getting fee-for-service payments enhanced by payments for shared savings. A good place to start is pharmacy, where savings can be quite substantial, Ms. Ham says.
6. Contract directly with employers. Cutting out the health insurance middleman and dealing directly with employers means more savings are put into the providers' pockets. Ms. Ham is working on such arrangements with a provider organization in Indiana.
7. Investigate extra expenses. If a certain physician's patients are more costly, you need to know exactly where the higher costs are coming from and how this is occurring. For example, if a high number of a primary care physician's patients are going to the ED, office hours may be too limited or the office is not effectively answering patients' calls.
8. Train physicians on stopping patient leakage. A lot of money is lost when patients go to big tertiary care centers rather than the ACO's own providers. To stem this leakage, train your primary care physicians on how to have a conversation with patients who want to go somewhere else. This involves showcasing sophisticated services within the organization. One organization used a psychologist to coach physicians on how to pitch this to patients, Ms. Ham says.
Learn more about MedVentive.