Two years after launching a Pioneer accountable care organization to serve Medicare patients, Peoria, Ill.-based OSF HealthCare has exceeded expectations in some areas. But in others, the organization has found that transitioning is a longer, more complex process than it had anticipated.
"We're about 10 percent of the way," says Mark Nafziger, chief administrative officer for OSF Medical Group at OSF HealthCare. "This is a journey. This is hard work. This is changing everything about how you do things, how you interpret things, how you understand information, how you build compensation plans."
OSF HealthCare, owned and operated by The Sisters of the Third Order of St. Francis in Peoria, established its Medicare ACO in January 2012, becoming one of 32 Pioneer ACOs around the country. Overall, the OSF Healthcare System has about 170,000 patients receiving ACO-based care, including 40,000 in its Pioneer ACO.
Nationally, all 32 Pioneer ACOs improved quality and performed better than fee-for-service Medicare in 15 quality measures, and generated $87.6 million in gross savings in 2012, according to an article by Kaiser Health News. CMS announced that ACOs nationwide reported savings of more than $380 million in their first year. Under the Medicare ACO model, when an ACO delivers high-quality care and spends healthcare dollars more wisely, it shares in the savings.
Last year, though, nearly a third of the healthcare organizations running Pioneer programs said they were dropping out, according to Kaiser Health News. Some didn't save enough money, while others moved into another Medicare ACO model with less risk of losing money, Kaiser reported. Bloomberg News reported that 13 of the 32 Pioneers produced shared savings with CMS in 2012, while two had shared losses of about $4 million.
For its part, OSF exceeded expectations in the impact through active care management of its most acute chronic patients with multiple issues. OSF reduced admission rates for that patient set by more than 30 percent in inpatient admissions and by more than 25 percent in emergency department visits. "We have about 35 care managers who really focus on having an active care management process with those people with the highest cost who have the greatest number of issues," Mr. Nafziger says.
But, like other ACOs, OSF missed some targets as well. "We missed an incentive payment in the first year of the program by less than one-half of a percent," he explains. "The length of time that it takes to get systems, processes and programs in place that have a significant effect, and the complexity of that was probably underestimated."
Another hurdle for OSF has been ongoing delays in receiving information it needs to benchmark its performance in tracking patient care. "It's really been a protracted period in getting information from CMS or third-party Medicare payers about how we're doing against the nation," he says. Since there are no limitations on where patients can seek health care, the only opportunity for ACOs to manage patient care is through an effective network of connected medical systems. "There is a bowl of services and data provided outside of our organization. The only way we get that information back is through payer systems, which are very archaic and slow," he says.
Despite the challenges, the ACO model has resulted in many positive changes at OSF. "The ACO vision and the commitment to population health management has really changed the perspective of our health system in terms of what our strategies are, what our focus is, and how we think about the future," says Mr. Nafziger. By moving from an inpatient admission focus, he noted that healthcare systems are thinking about how to better develop care management programs for the focused populations they serve.
The population health management focus has helped OSF to redefine its concept of a patient-centered medical home, typically defined as a care delivery model whereby patient treatment is coordinated through their primary care physician. "Initially, we thought of it as one place that does everything. Now, we are working towards different types of medical homes for groups of patients with different types of issues," he says.
Another key challenge is changing the mindset from the current fee-for-service system to an ACO model to limit unnecessary spending. "One difficulty is the adoption of that mentality by the physicians, who are used to working independently in ordering tests and managing patient care. But it's not just physicians. While we understand the importance and value of population health management, there's so much revenue streams driven by admissions, visits, surgeries and so forth. Living in both worlds is pretty schizophrenic," Mr. Nafziger notes.
At the same time, plunging into an ACO model can be risky. "You have to be careful about how quickly you shift because you can create some real challenges if you get too far ahead of where you’re getting paid for the benefits of the savings you achieve," he says.
It also takes time to develop new compensation plans. OSF, for example, employs about 700 physicians and nearly 300 advanced practitioners. "Volume still matters a lot. But then to shift to reliable measurements on which you can base compensation is really hard work and really hard work to get adopted. You have to get the buy-in," he says.
Mr. Nafziger believes healthcare organizations must become adept at functioning in an ACO environment, but said those changes will lead to new opportunities. "We really see the patient-centered medical home as being really, really important to the success of this. Taking a broader view of the patient beyond just the clinical aspect — the behavioral health considerations, the lifestyle things — how do we become more effective in engaging the patient with us?
"A fair amount of those things are going to be nonclinical. It's not a comfortable place for a health system to step out into. We understand that if we're going to be successful in these endeavors, patient engagement is critical. And patient engagement has to go into many areas beyond clinical care by a primary care physician. If we can adopt that kind of thinking throughout our organization and put it into effect, that will benefit both OSF and the patients we serve," he explains.
Patrick White has been in the healthcare management field for over thirty years, seventeen of which were in medical-group practice management. He received a master of public health degree from the University of Michigan in Ann Arbor and spent thirteen years with the Henry Ford Health System, including five years as the administrator for the Department of Internal Medicine. He has also served as the executive director of Michigan Heart, a 36-member cardiology practice in Ann Arbor, for twelve years. Pat was also very active in the Cardiology Leadership Alliance and served as its president in 2001.