Sometime between now and their seven-page inclusion in the Patient Protection and Affordable Care Act, accountable care organizations have been pinned as the unicorns of healthcare. Providers may be familiar with the concept, but many have not yet seen an ACO and don't know what it looks like.
Glenn Fosdick, FACHE, and David Shulkin, MD, do know what ACOs look like: they head them. Mr. Fosdick is the president and CEO of The Nebraska Medical Center in Omaha, which launched an ACO with Methodist Health System in Feb. 2010, making it the first ACO in the nation to be led by two competing hospitals. The Accountable Care Alliance, as the systems have named it, is led by a 12-member board of directors, mostly physicians, with six from The Nebraska Medical Center and six from Methodist Health System.
Dr. Shulkin is the president of Morristown (N.J.) Memorial Hospital and vice president of Atlantic Health, the hospital's parent company that formed an ACO in Dec. 2010. More than 300 physicians participate in Atlantic's ACO, which serves a seven-county area in New Jersey. The system is comprised of 658-bed Morristown Memorial and 504-bed Overlook Hospital in Summit, N.J. Atlantic Health expects its ACO to be ready to work with various populations, including Medicare patients, by Jan. 2012. Here, Mr. Fosdick and Dr. Shulkin answer questions and discuss their respective experiences launching an ACO.
Q: Your organizations were rather ahead of the curb when they launched their accountable care organization. Can you provide some insight on how you knew the time was right for your hospital to proceed and enter ACO agreements?
Glenn Fosdick: I think for the last three years or more, because of healthcare reform and the discussions taking place in Washington, D.C., we recognized some things had to change. We knew we would not be paid the way we are today, and it was obvious we had to do something. More than a year ago, we launched our ACO, called the Accountable Care Alliance. The ACA is a partnership between Methodist Health System, The Nebraska Medical Center and their affiliated physicians. The collaboration of these two competing health systems is meant to form a best practices network to share quality improvement strategies, improve care coordination and efficiency, and find opportunities to reduce costs.
David Shulkin, MD: The ACO concept is certainly not a new one. Many of us who have worked on improving the healthcare system have long believed in integrated care delivery systems and coordinated care as strategies to improve value. What has really happened is that we have run out of other alternatives than what we need to do now: tackle the fragmentation of our healthcare system. ACO principles are actually long standing principles, and the ACO really represents a repackaged term. In fact, some call this craze — the ACO that is — “Another Consulting Opportunity.” In reality, it is not something new but returns us to basic concepts of care management.
Q: Many industry experts have labeled 2010 as the year of "ACO fever," with many healthcare organizations panicking over the race to a new model. Was your organization able to resist that panic? Do you think 2011 will present similar uncertainty?
Mr.Fosdick: We're very comfortable with the work we're doing with our ACO right now to create better clinical care for our patients. This type of work wouldn't change, regardless of the types of regulations that may or may not be created in Washington, D.C.
Dr. Shulkin: We certainly are not part of the ACO rush. We understand that a commitment to an ACO is long-term and requires foundational change in the medical marketplace. Change in healthcare is never quick, especially when it challenges some current economic principles in the market. However, I also believe that some “ACO fever” is a good thing. There is often so much inertia in healthcare that it takes a certain urgency and competitive push to prompt organizations to make commitments, both in terms of resources but, even more importantly, in terms of vision and leadership attention. Maybe catching the fever will accelerate these changes.
Q: What type of infrastructural changes did your systems make to foster ACO development? Can you speak on the costs associated with these changes?
Mr. Fosdick: Our ACO started by identifying a group of strong physician leaders from Methodist Health System and The Nebraska Medical Center who were sold on the ACO model for identifying ways to provide high-quality, cost-efficient care. These 10 physicians (five from each hospital) and the hospitals' CFOs make up the ACA board. The largest cost has been enhancing our electronic medical record system so we can more easily share information. We were planning to change our electronic medical record system regardless, but the ACO gives us another reason. Now we will be able to more easily share information with providers within and outside of our system. There have also been some legal fees, which we've been splitting 50-50 with Methodist.
Dr. Shulkin: The infrastructure needed is easy to talk about and hard to develop. Infrastructural changes include developing a governance structure that allows clinicians and patients to design healthcare strategies that work in the community; providing an IT backbone to facilitate information sharing; allowing patients to participate in their care plans; measuring outcomes and improvement strategies; and creating an economic and clinical alignment. The cost of that, in the long-run, is priceless.
Q: Can you discuss a few of the challenges your organization encountered while implementing this model?
Mr. Fosdick: There have been some challenges in educating the physicians on why we are forming an ACO, but we are at the point where the physicians are very much engaged. Still, there is a large segment of physicians who are not involved, so we have plans to educate them and encourage their participation. In addition to that, there are voices in both organizations (Nebraska and Methodist) that are concerned. "Aren't we competitors with each other? Why are we doing this?" As we expand into different specialties and work on best practices and core results, it will probably be challenging to get people who are still in "competition mode" to sit down and work towards a greater good for the community and for themselves.
Dr. Shulkin: Our biggest challenge to date has been to find clinical leadership that is ready to innovate and take the risk of new models for care delivery.
Q: On that note, can you share a few of the benefits or positive changes you've noticed from the ACO?
Mr.Fosdick: In order for an ACO to be successful, the hospital administration needs to have a more collaborative arrangement with medical staff — more collaborative than they've had before. It is essential to allow increased physician involvement in decision-making. The real focus is to improve the health of the population we serve — to keep people healthier so they don't come to the hospital to manage their chronic conditions. They can have a better quality of life because of this.
Dr. Shulkin: Our biggest benefit has been in finding these clinical leaders and then engaging in the real work of improving population based approaches to care. Once engagement in these discussions begins, this redefines the relationships and dialogue between physicians, hospitals and payors and eliminates a lot of the traditional barriers that have been in the way in our traditional structure of healthcare delivery.
Q: You are among a few select leaders who have led a system through this major development. What leadership skills came to the forefront during ACO-development that may not have been as evident in past healthcare experiences?
Mr. Fosdick: It is important to have an open mind to doing things differently than you have in the past. It's also important to concede some of your responsibilities to physician leadership. Work with them as they implement new clinical protocols.
Dr. Shulkin: The leadership skills that are most important are not too surprising. They are what people want from their leaders: trust, values and transparency. This is about building relationships and pursuing paths because you can make a difference in working with others. Another key leadership attribute is admitting that you alone don’t have all of the answers. Be able to say, “I really don’t know, but we can find out." A sense of humor doesn't hurt, either.
Q: On that note, what advice would you dispense to hospital leaders who are about to undertake this significant responsibility?
Mr. Fosdick: You need to recognize from the very beginning that in order for an ACO to be effective, it needs to truly be a collaborative effort between medical leadership and yourself.
Dr. Shulkin: My advice to hospital leaders is to make sure you devote enough time. Running a hospital and running an ACO are different jobs and both are probably full-time. Secondly, choose people who are trusted and have good communication skills to work on this. This is not task-oriented work or transactional, often which hospital operators excel in. Rather, this work is more conceptual and requires an ability to innovate and redesign processes.
Q: The word "relationship" comes up a lot in ACO discussions: hospital-physician, physician-physician, hospital-payor, and of course, hospital-patient — just to name a few. How have your hospitals worked to strengthen relationships with the various components of an ACO — physicians, other providers, the community and payors.
Mr. Fosdick: Early on, we worked to develop a strong relationship with a competitor hospital. Our board of leaders from both hospitals helped break down barriers between the two health systems. They had a vision and a willingness to look upon this model objectively and to approach new ideas that hadn't been considered before. Strong physician leadership is a key ingredient. If these physicians are strong leaders, they will generate followers. We have been in talks with insurance companies about developing a narrow network within our ACO, but nothing has been finalized. We are examining whether or not there is value in doing so.
Dr. Shulkin: Now that you mention it, I have used the word “relationships” a lot in my first eight questions. It is true that the ACO model presents a chance to redefine old relationships and start new ones. It does require collaboration between physician, other providers, payors, patients and other vendors to come together with value as the driving force.
Q: There are new headlines everyday about healthcare reform being repealed. Even if that were to happen, do you think the ACO model would survive? Why or why not?
Mr. Fosdick: I would hope it would. I think that we would try to still follow the ACO model. Whether it is ACO or bundled payments, the future is going to require new collaboration between the physicians and hospital providers. We are now starting to make progress in areas where, historically, the hospital faced resistance from physicians.
Dr. Shulkin: Healthcare reform has less to do with politics than it has to do with the fundamental economic sustainability of our current healthcare system. Regardless of whether Republicans or Democrats are in control, we need workable solutions to bend the cost curve and improve care delivery. The ability to coordinate and integrate care will not go away. The term ACO will almost certainly migrate to another new acronym, but the work will continue.
Q: Can you share any new developments or announcements regarding your system's ACO for the year ahead?
Mr. Fosdick: The ACA has been focusing on clinical areas with high-volume, high-variation and high-cost Diagnosis Related Groups. One of the first quality improvement projects was to standardize care for total joint procedures. This was a huge undertaking to standardize processes among three orthopedic groups (the private practice at The Nebraska Medical Center, academic physicians at The Nebraska Medical Center and the private practice at Methodist). Another major focus has been on reducing 30-day hospital readmissions. The ACA has established procedures to review readmission processes and develop best practices. Some of those best practices include a new discharge plan for those at risk for readmission and a care transition plan that has been implemented for patients who are discharged to nursing home care or a skilled nursing facility.
Dr. David Shulkin: We are looking for partnerships with other providers, systems, payors, employers and vendors that can help manage population health. The big announcements will be in the nature of these partnerships.
Glenn Fosdick, FACHE, and David Shulkin, MD, do know what ACOs look like: they head them. Mr. Fosdick is the president and CEO of The Nebraska Medical Center in Omaha, which launched an ACO with Methodist Health System in Feb. 2010, making it the first ACO in the nation to be led by two competing hospitals. The Accountable Care Alliance, as the systems have named it, is led by a 12-member board of directors, mostly physicians, with six from The Nebraska Medical Center and six from Methodist Health System.
Dr. Shulkin is the president of Morristown (N.J.) Memorial Hospital and vice president of Atlantic Health, the hospital's parent company that formed an ACO in Dec. 2010. More than 300 physicians participate in Atlantic's ACO, which serves a seven-county area in New Jersey. The system is comprised of 658-bed Morristown Memorial and 504-bed Overlook Hospital in Summit, N.J. Atlantic Health expects its ACO to be ready to work with various populations, including Medicare patients, by Jan. 2012. Here, Mr. Fosdick and Dr. Shulkin answer questions and discuss their respective experiences launching an ACO.
Q: Your organizations were rather ahead of the curb when they launched their accountable care organization. Can you provide some insight on how you knew the time was right for your hospital to proceed and enter ACO agreements?
Glenn Fosdick: I think for the last three years or more, because of healthcare reform and the discussions taking place in Washington, D.C., we recognized some things had to change. We knew we would not be paid the way we are today, and it was obvious we had to do something. More than a year ago, we launched our ACO, called the Accountable Care Alliance. The ACA is a partnership between Methodist Health System, The Nebraska Medical Center and their affiliated physicians. The collaboration of these two competing health systems is meant to form a best practices network to share quality improvement strategies, improve care coordination and efficiency, and find opportunities to reduce costs.
David Shulkin, MD: The ACO concept is certainly not a new one. Many of us who have worked on improving the healthcare system have long believed in integrated care delivery systems and coordinated care as strategies to improve value. What has really happened is that we have run out of other alternatives than what we need to do now: tackle the fragmentation of our healthcare system. ACO principles are actually long standing principles, and the ACO really represents a repackaged term. In fact, some call this craze — the ACO that is — “Another Consulting Opportunity.” In reality, it is not something new but returns us to basic concepts of care management.
Q: Many industry experts have labeled 2010 as the year of "ACO fever," with many healthcare organizations panicking over the race to a new model. Was your organization able to resist that panic? Do you think 2011 will present similar uncertainty?
Mr.Fosdick: We're very comfortable with the work we're doing with our ACO right now to create better clinical care for our patients. This type of work wouldn't change, regardless of the types of regulations that may or may not be created in Washington, D.C.
Dr. Shulkin: We certainly are not part of the ACO rush. We understand that a commitment to an ACO is long-term and requires foundational change in the medical marketplace. Change in healthcare is never quick, especially when it challenges some current economic principles in the market. However, I also believe that some “ACO fever” is a good thing. There is often so much inertia in healthcare that it takes a certain urgency and competitive push to prompt organizations to make commitments, both in terms of resources but, even more importantly, in terms of vision and leadership attention. Maybe catching the fever will accelerate these changes.
Q: What type of infrastructural changes did your systems make to foster ACO development? Can you speak on the costs associated with these changes?
Mr. Fosdick: Our ACO started by identifying a group of strong physician leaders from Methodist Health System and The Nebraska Medical Center who were sold on the ACO model for identifying ways to provide high-quality, cost-efficient care. These 10 physicians (five from each hospital) and the hospitals' CFOs make up the ACA board. The largest cost has been enhancing our electronic medical record system so we can more easily share information. We were planning to change our electronic medical record system regardless, but the ACO gives us another reason. Now we will be able to more easily share information with providers within and outside of our system. There have also been some legal fees, which we've been splitting 50-50 with Methodist.
Dr. Shulkin: The infrastructure needed is easy to talk about and hard to develop. Infrastructural changes include developing a governance structure that allows clinicians and patients to design healthcare strategies that work in the community; providing an IT backbone to facilitate information sharing; allowing patients to participate in their care plans; measuring outcomes and improvement strategies; and creating an economic and clinical alignment. The cost of that, in the long-run, is priceless.
Q: Can you discuss a few of the challenges your organization encountered while implementing this model?
Mr. Fosdick: There have been some challenges in educating the physicians on why we are forming an ACO, but we are at the point where the physicians are very much engaged. Still, there is a large segment of physicians who are not involved, so we have plans to educate them and encourage their participation. In addition to that, there are voices in both organizations (Nebraska and Methodist) that are concerned. "Aren't we competitors with each other? Why are we doing this?" As we expand into different specialties and work on best practices and core results, it will probably be challenging to get people who are still in "competition mode" to sit down and work towards a greater good for the community and for themselves.
Dr. Shulkin: Our biggest challenge to date has been to find clinical leadership that is ready to innovate and take the risk of new models for care delivery.
Q: On that note, can you share a few of the benefits or positive changes you've noticed from the ACO?
Mr.Fosdick: In order for an ACO to be successful, the hospital administration needs to have a more collaborative arrangement with medical staff — more collaborative than they've had before. It is essential to allow increased physician involvement in decision-making. The real focus is to improve the health of the population we serve — to keep people healthier so they don't come to the hospital to manage their chronic conditions. They can have a better quality of life because of this.
Dr. Shulkin: Our biggest benefit has been in finding these clinical leaders and then engaging in the real work of improving population based approaches to care. Once engagement in these discussions begins, this redefines the relationships and dialogue between physicians, hospitals and payors and eliminates a lot of the traditional barriers that have been in the way in our traditional structure of healthcare delivery.
Q: You are among a few select leaders who have led a system through this major development. What leadership skills came to the forefront during ACO-development that may not have been as evident in past healthcare experiences?
Mr. Fosdick: It is important to have an open mind to doing things differently than you have in the past. It's also important to concede some of your responsibilities to physician leadership. Work with them as they implement new clinical protocols.
Dr. Shulkin: The leadership skills that are most important are not too surprising. They are what people want from their leaders: trust, values and transparency. This is about building relationships and pursuing paths because you can make a difference in working with others. Another key leadership attribute is admitting that you alone don’t have all of the answers. Be able to say, “I really don’t know, but we can find out." A sense of humor doesn't hurt, either.
Q: On that note, what advice would you dispense to hospital leaders who are about to undertake this significant responsibility?
Mr. Fosdick: You need to recognize from the very beginning that in order for an ACO to be effective, it needs to truly be a collaborative effort between medical leadership and yourself.
Dr. Shulkin: My advice to hospital leaders is to make sure you devote enough time. Running a hospital and running an ACO are different jobs and both are probably full-time. Secondly, choose people who are trusted and have good communication skills to work on this. This is not task-oriented work or transactional, often which hospital operators excel in. Rather, this work is more conceptual and requires an ability to innovate and redesign processes.
Q: The word "relationship" comes up a lot in ACO discussions: hospital-physician, physician-physician, hospital-payor, and of course, hospital-patient — just to name a few. How have your hospitals worked to strengthen relationships with the various components of an ACO — physicians, other providers, the community and payors.
Mr. Fosdick: Early on, we worked to develop a strong relationship with a competitor hospital. Our board of leaders from both hospitals helped break down barriers between the two health systems. They had a vision and a willingness to look upon this model objectively and to approach new ideas that hadn't been considered before. Strong physician leadership is a key ingredient. If these physicians are strong leaders, they will generate followers. We have been in talks with insurance companies about developing a narrow network within our ACO, but nothing has been finalized. We are examining whether or not there is value in doing so.
Dr. Shulkin: Now that you mention it, I have used the word “relationships” a lot in my first eight questions. It is true that the ACO model presents a chance to redefine old relationships and start new ones. It does require collaboration between physician, other providers, payors, patients and other vendors to come together with value as the driving force.
Q: There are new headlines everyday about healthcare reform being repealed. Even if that were to happen, do you think the ACO model would survive? Why or why not?
Mr. Fosdick: I would hope it would. I think that we would try to still follow the ACO model. Whether it is ACO or bundled payments, the future is going to require new collaboration between the physicians and hospital providers. We are now starting to make progress in areas where, historically, the hospital faced resistance from physicians.
Dr. Shulkin: Healthcare reform has less to do with politics than it has to do with the fundamental economic sustainability of our current healthcare system. Regardless of whether Republicans or Democrats are in control, we need workable solutions to bend the cost curve and improve care delivery. The ability to coordinate and integrate care will not go away. The term ACO will almost certainly migrate to another new acronym, but the work will continue.
Q: Can you share any new developments or announcements regarding your system's ACO for the year ahead?
Mr. Fosdick: The ACA has been focusing on clinical areas with high-volume, high-variation and high-cost Diagnosis Related Groups. One of the first quality improvement projects was to standardize care for total joint procedures. This was a huge undertaking to standardize processes among three orthopedic groups (the private practice at The Nebraska Medical Center, academic physicians at The Nebraska Medical Center and the private practice at Methodist). Another major focus has been on reducing 30-day hospital readmissions. The ACA has established procedures to review readmission processes and develop best practices. Some of those best practices include a new discharge plan for those at risk for readmission and a care transition plan that has been implemented for patients who are discharged to nursing home care or a skilled nursing facility.
Dr. David Shulkin: We are looking for partnerships with other providers, systems, payors, employers and vendors that can help manage population health. The big announcements will be in the nature of these partnerships.