CMS' July announcement of 89 new accountable care organizations participating in the Medicare Shared Savings Program emphasizes a trend happening on the commercial side of things too: ACOs or similar models are sprouting up across the nation, with many health systems and hospitals considering ways to get in the ACO game.
But ACOs don't appear overnight. They demand months, sometimes even years, of strategic planning and cooperation between providers and payors.
Here, a panel of five health system leaders from ACOs across the nation reflects on some of the breakthroughs and challenges involved in establishing their organization. The leaders represent Phoenix-based Banner Health Network, which is in a commercial ACO relationship with Aetna and was the first ACO accepted into CMS' Pioneer ACO program in late 2011; Walnut Creek, Calif.-based John Muir Health, part of a commercial ACO with Blue Shield of California, as well as a participant in the Medicare Shared Savings Program; Appleton, Wis.-based ThedaCare, a CMS Pioneer ACO in a partnership with Bellin Health Care; and Marietta, Ga.-based WellStar Health System, recently accepted into the MSSP.
Question: Five years ago, would you have ever imagined leading something akin to an ACO?
Dean Gruner, MD, President and CEO, ThedaCare: Actually, yes. The reason I say that is I think many of us believe that one of the root causes of the cost crisis in healthcare in this country is the fee-for-service payment methodology. When I was in Washington a few years ago, I talked to members of both political parties. Both seemed to agree that there needed to be something other than fee-for-service payments as well as a way to better support primary care in this country.
I think it's been very slow for payment reform; in fact, you don't hear either political party talk much about payment reform. People tend to broad brush things and say you are either for or against the Affordable Care Act. But I believe most politicians believe that 80 percent or more of that legislation was good.
Chuck Lehn, CEO, Banner Health Network: Yes. I think most in the industry have understood for a while that some level of re-alignment between purchasers, providers and consumers would occur mostly due to rising costs.
Mitchell Zack, Vice President of Employer and Payor Relations, John Muir Health: We started years before the ACO concept was founded — our history as an integrated system turned out to be integral to our success. We already had key components of an integrated care foundation built, and the ACO fit into that foundation.
Q: What was the most important thing you did as an executive building your ACO's foundation?
Marcia Delk, MD, Senior Vice President and Chief Quality and Safety Officer, WellStar Health System: Persevering. Part of this is about understanding where the journey is heading so you know what you need to do to assist your organization in adjusting to change. Additionally, it's been very important to think about how to change silos of care to a continuum of care and understanding ACO concepts, making sure that we build a good foundation.
Barbara Corey, Senior Vice President of Managed Care, WellStar: Also, you need to realize that the transition to an ACO really needs to be physician-driven and physician-led. As you look to redesign care, physicians need to be at the center. Data needs to be there for them to effectively do that.
MD: We've developed a service line infrastructure with physician leaders that can help create linkages. The recognition that physicians need leadership experience and training has been a very important component of our journey. There's been a large emphasis on developing a core group of physicians that have solid business training.
With our new service line infrastructure, we have a recognized leader in key specialty areas, We're supporting each specialty leader with a formal committee structure to support the work that needs to be done to link the continuum of care throughout our organization, from inpatient to outpatient, home health, primary care and other services. The service line infrastructure was part of our strategic development outside of our ACO, and we decided to use that infrastructure to help accelerate the work of our ACO.
BC: I think that's a good example of trying to balance new versus existing infrastructure. Rather than create new leadership within an ACO, we are leveraging a structure we already have within our health system to drive the results of the ACO.
Q: What advice would you offer leaders of hospitals and health systems looking to put together ACO?
CL: It will take more time and energy than you could have imagined. Find early wins and areas, such as improving care, that everyone can rally around. Don't try to avoid conflict. Acknowledge areas where there will be conflicts or when everyone won't win. This is transformational change and it will be messy.
MZ: Hospital leaders need to ask themselves a few questions. First, what are we trying to accomplish in an ACO? Second, is this ACO
aligned with our future goals and objectives?
Some hospitals and health systems may feel they need to jump at the new 'hot' thing. However, success in an ACO venture requires an incredible amount of monetary resources and human capital. I think hospitals nationwide should really look at those things before jumping into an ACO. Frankly, an ACO won't work unless all participating players are on the same page. My advice to executives at other hospitals would be to wait on entering into an ACO arrangement until you're ready. The ACO concept doesn't seem to be going away anytime soon.
BC: When it comes to ACOs, pick a place to start and start working on it. You're not going to find a perfect situation to do it, and you're not going to be able to have it all thought out. You need to jump in and start working on the process so your organization can build the necessary skill sets.
DG: Since every organization's circumstance is unique and their marketplace is unique, I'm a little hesitant to give other people advice. In general, we believe that payment reform is going to happen. So you have to decide whether you want to sit on the sidelines and watch it unfold. Or, at what point do you want to try something that is an acceptable risk for your organization? We felt our ACO arrangement was an acceptable risk and that there was probably an advantage with getting experience with a new payment method rather than sitting and watching for the first few years.
Now, some organizations may feel that, in their particular circumstances, they are better off to be an observer for a while. I don't know if that's wrong; they just have to decide that.
Q: What were some of your specific considerations when drafting shared savings agreements?
BC: Primarily we were looking for a shared vision of high quality and efficient healthcare delivery. Beyond that, we were seeking a commitment to aligning goals across the organization. And then, looking downstream, we needed to consider of alignment of goals as well as fair distribution of shared savings. It's important to balance new infrastructure needs with delivering shared savings to all ACO participants. Finally, we realize our shared savings agreements need to take into account an overall commitment to high-quality and highly efficient delivery of care across the ACO.
CL: We have tried to build them around the concepts of the "triple aim" as measurements of success and reward. We have also tried to focus on equity and fairness.
DG: We believe that the CMS Pioneer ACO has acceptable risk. It's relatively low risk and if things really went poorly we can get out of it with a 60-day notice. That's virtually unheard of. In general, the Pioneer ACO is set up so that if we can bring the cost trend of the people we are responsible for in at a smaller rate of increase than the national trend, Medicare will share those savings with us.
One of our primary considerations was how we as an ACO would manage risk and share risk. The health systems were more comfortable with this than the physicians. Our physicians were given an option to participate in risk sharing or not. Those more comfortable with taking on risk were given the option to take on up to twice the amount of the baseline risk we allotted for each participating physician in the ACO.
Otherwise, we kept it very simple and said any surplus would be distributed on a proportional basis to all the physicians participating in our ACO.
Q: What has been the biggest challenge of being a part of an ACO so far?
MZ: One of the biggest challenges for our Blue Shield ACO was defining what our quality and financial metrics would look like and how they would be measured. We've worked extensively with Blue Shield to create common definitions for various metrics. We've worked internally to ensure we're focusing on care interventions as well. There are things Blue Shield wants to achieve and there are things we seek to achieve as an ACO; fortunately, we are very aligned in our vision.
BC: One of the biggest challenges has been the overall management and cultural changes involved looking at things differently and stepping up the level of coordination among various management functions across our system.
It's also been challenging to try and strike a balance between infrastructure needs without adding new infrastructure where you don't need it. We've been trying to take advantage of existing infrastructure and be selective about new infrastructure we need. While we know our ACO plan will require some new infrastructure, we want to be resourceful with what we currently have in place at WellStar.
Another challenge has been to identify the appropriate analytical tools to be effective at population health management and find the most effective tools to help us navigate inpatient and outpatient care coordination.
DG: The hardest part is probably communication and decision making. It's not like our ACO is a single entity in which a single management team can make all the
decisions. Trying to communicate with everyone involved has been challenging at times.
CL: To date, we have been successful in developing business models with government and commercial payors. Generation one of our business models are approximately 60 to 70 percent completed. Our clinical models — how we really improve care — are still in the formation stages with some implementation around chronic care management and case management programs. The clinical models are about 20 to 30 percent developed. Implementing the technology needed to pass information from care setting to care setting, close gaps in care and adhere to practice standards is underway and maybe 20 to 30 percent complete. Engaging our ACO members and/or consumer-patients in improving their well being is only in the very beginning stages.
The biggest challenge is culturally changing the industry and patients from a historical focus on treatment to a broader focus on prevention, wellbeing, early detection and treatment. Everyone is going to have to change their thinking and behaviors in some ways for this to work.
Q: How does the Supreme Court's ruling to uphold the Affordable Care Act affect your ACO?
MD: The primary impact for us as an ACO participating in the Medicare Shared Savings Program is that the Court's decision creates more stability with the CMS ACO work within our organization. Before the ruling, we were trying to work through administratively what would happen if the Supreme Court decided to overturn the healthcare law. Would we still have an ACO agreement with CMS if the Court had decided to overturn the PPACA?
For the time being, we have stability and we have some more comfort in decision making as an organization. However, we recognize that the PPACA is open to legislative changes in the future.
BC: I think regardless of the Supreme Court ruling, the industry has to look at how we redesign ourselves to provide more value to our patients and our communities. We needed to be on the path of healthcare redesign, marching in this direction.
DG: It certainly means that the contractual relationship we have with the Center for Medicare and Medicaid Innovation is unaffected. I suppose if they would have thrown out the entire PPACA that would have opened up a whole can of worms on the contract we have in place.
However, I think the political environment is such that we don't know what will happen in the next year. What I explain to people in our organization is that politics is not predictable. The regulations and legislations we will have to live with are also not predictable.
What is predictable is that our patients and communities want greater value for healthcare. Our focus is on delivering that greater value for our community. We define this as a safer environment of higher quality with greater customer satisfaction at an acceptable cost.
Q: Where do you see your ACO five years from now?
DG: In the ideal world, we would have converted from one payment methodology that pays for volume to another that pays for value. And we would be achieving the triple aim: doing a better job of preventing illness; a better job of delivering a redesigned patient care experience for sick people; and flattening the rate of cost increases. We would be doing all this while still having a thriving organization that finds a way to be financially sustainable. That's what our ACO intends to achieve. Those are pretty lofty goals and quite difficult to accomplish — but I believe we have a pretty good chance of doing it.
CL: I am hopeful that five years from now our collective focus will be on the reduction of poor health and disease. We will have used the time to build a sustainable healthcare system.
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But ACOs don't appear overnight. They demand months, sometimes even years, of strategic planning and cooperation between providers and payors.
Here, a panel of five health system leaders from ACOs across the nation reflects on some of the breakthroughs and challenges involved in establishing their organization. The leaders represent Phoenix-based Banner Health Network, which is in a commercial ACO relationship with Aetna and was the first ACO accepted into CMS' Pioneer ACO program in late 2011; Walnut Creek, Calif.-based John Muir Health, part of a commercial ACO with Blue Shield of California, as well as a participant in the Medicare Shared Savings Program; Appleton, Wis.-based ThedaCare, a CMS Pioneer ACO in a partnership with Bellin Health Care; and Marietta, Ga.-based WellStar Health System, recently accepted into the MSSP.
Question: Five years ago, would you have ever imagined leading something akin to an ACO?
Dean Gruner, MD, President and CEO, ThedaCare: Actually, yes. The reason I say that is I think many of us believe that one of the root causes of the cost crisis in healthcare in this country is the fee-for-service payment methodology. When I was in Washington a few years ago, I talked to members of both political parties. Both seemed to agree that there needed to be something other than fee-for-service payments as well as a way to better support primary care in this country.I think it's been very slow for payment reform; in fact, you don't hear either political party talk much about payment reform. People tend to broad brush things and say you are either for or against the Affordable Care Act. But I believe most politicians believe that 80 percent or more of that legislation was good.
Chuck Lehn, CEO, Banner Health Network: Yes. I think most in the industry have understood for a while that some level of re-alignment between purchasers, providers and consumers would occur mostly due to rising costs.
Mitchell Zack, Vice President of Employer and Payor Relations, John Muir Health: We started years before the ACO concept was founded — our history as an integrated system turned out to be integral to our success. We already had key components of an integrated care foundation built, and the ACO fit into that foundation.
Q: What was the most important thing you did as an executive building your ACO's foundation?
Marcia Delk, MD, Senior Vice President and Chief Quality and Safety Officer, WellStar Health System: Persevering. Part of this is about understanding where the journey is heading so you know what you need to do to assist your organization in adjusting to change. Additionally, it's been very important to think about how to change silos of care to a continuum of care and understanding ACO concepts, making sure that we build a good foundation.Barbara Corey, Senior Vice President of Managed Care, WellStar: Also, you need to realize that the transition to an ACO really needs to be physician-driven and physician-led. As you look to redesign care, physicians need to be at the center. Data needs to be there for them to effectively do that.
MD: We've developed a service line infrastructure with physician leaders that can help create linkages. The recognition that physicians need leadership experience and training has been a very important component of our journey. There's been a large emphasis on developing a core group of physicians that have solid business training.
With our new service line infrastructure, we have a recognized leader in key specialty areas, We're supporting each specialty leader with a formal committee structure to support the work that needs to be done to link the continuum of care throughout our organization, from inpatient to outpatient, home health, primary care and other services. The service line infrastructure was part of our strategic development outside of our ACO, and we decided to use that infrastructure to help accelerate the work of our ACO.
BC: I think that's a good example of trying to balance new versus existing infrastructure. Rather than create new leadership within an ACO, we are leveraging a structure we already have within our health system to drive the results of the ACO.
Q: What advice would you offer leaders of hospitals and health systems looking to put together ACO?
CL: It will take more time and energy than you could have imagined. Find early wins and areas, such as improving care, that everyone can rally around. Don't try to avoid conflict. Acknowledge areas where there will be conflicts or when everyone won't win. This is transformational change and it will be messy.
MZ: Hospital leaders need to ask themselves a few questions. First, what are we trying to accomplish in an ACO? Second, is this ACO
aligned with our future goals and objectives?Some hospitals and health systems may feel they need to jump at the new 'hot' thing. However, success in an ACO venture requires an incredible amount of monetary resources and human capital. I think hospitals nationwide should really look at those things before jumping into an ACO. Frankly, an ACO won't work unless all participating players are on the same page. My advice to executives at other hospitals would be to wait on entering into an ACO arrangement until you're ready. The ACO concept doesn't seem to be going away anytime soon.
BC: When it comes to ACOs, pick a place to start and start working on it. You're not going to find a perfect situation to do it, and you're not going to be able to have it all thought out. You need to jump in and start working on the process so your organization can build the necessary skill sets.
DG: Since every organization's circumstance is unique and their marketplace is unique, I'm a little hesitant to give other people advice. In general, we believe that payment reform is going to happen. So you have to decide whether you want to sit on the sidelines and watch it unfold. Or, at what point do you want to try something that is an acceptable risk for your organization? We felt our ACO arrangement was an acceptable risk and that there was probably an advantage with getting experience with a new payment method rather than sitting and watching for the first few years.
Now, some organizations may feel that, in their particular circumstances, they are better off to be an observer for a while. I don't know if that's wrong; they just have to decide that.
Q: What were some of your specific considerations when drafting shared savings agreements?
BC: Primarily we were looking for a shared vision of high quality and efficient healthcare delivery. Beyond that, we were seeking a commitment to aligning goals across the organization. And then, looking downstream, we needed to consider of alignment of goals as well as fair distribution of shared savings. It's important to balance new infrastructure needs with delivering shared savings to all ACO participants. Finally, we realize our shared savings agreements need to take into account an overall commitment to high-quality and highly efficient delivery of care across the ACO. CL: We have tried to build them around the concepts of the "triple aim" as measurements of success and reward. We have also tried to focus on equity and fairness.
DG: We believe that the CMS Pioneer ACO has acceptable risk. It's relatively low risk and if things really went poorly we can get out of it with a 60-day notice. That's virtually unheard of. In general, the Pioneer ACO is set up so that if we can bring the cost trend of the people we are responsible for in at a smaller rate of increase than the national trend, Medicare will share those savings with us.
One of our primary considerations was how we as an ACO would manage risk and share risk. The health systems were more comfortable with this than the physicians. Our physicians were given an option to participate in risk sharing or not. Those more comfortable with taking on risk were given the option to take on up to twice the amount of the baseline risk we allotted for each participating physician in the ACO.
Otherwise, we kept it very simple and said any surplus would be distributed on a proportional basis to all the physicians participating in our ACO.
Q: What has been the biggest challenge of being a part of an ACO so far?
MZ: One of the biggest challenges for our Blue Shield ACO was defining what our quality and financial metrics would look like and how they would be measured. We've worked extensively with Blue Shield to create common definitions for various metrics. We've worked internally to ensure we're focusing on care interventions as well. There are things Blue Shield wants to achieve and there are things we seek to achieve as an ACO; fortunately, we are very aligned in our vision.
BC: One of the biggest challenges has been the overall management and cultural changes involved looking at things differently and stepping up the level of coordination among various management functions across our system.
It's also been challenging to try and strike a balance between infrastructure needs without adding new infrastructure where you don't need it. We've been trying to take advantage of existing infrastructure and be selective about new infrastructure we need. While we know our ACO plan will require some new infrastructure, we want to be resourceful with what we currently have in place at WellStar.
Another challenge has been to identify the appropriate analytical tools to be effective at population health management and find the most effective tools to help us navigate inpatient and outpatient care coordination.
DG: The hardest part is probably communication and decision making. It's not like our ACO is a single entity in which a single management team can make all the
decisions. Trying to communicate with everyone involved has been challenging at times. CL: To date, we have been successful in developing business models with government and commercial payors. Generation one of our business models are approximately 60 to 70 percent completed. Our clinical models — how we really improve care — are still in the formation stages with some implementation around chronic care management and case management programs. The clinical models are about 20 to 30 percent developed. Implementing the technology needed to pass information from care setting to care setting, close gaps in care and adhere to practice standards is underway and maybe 20 to 30 percent complete. Engaging our ACO members and/or consumer-patients in improving their well being is only in the very beginning stages.
The biggest challenge is culturally changing the industry and patients from a historical focus on treatment to a broader focus on prevention, wellbeing, early detection and treatment. Everyone is going to have to change their thinking and behaviors in some ways for this to work.
Q: How does the Supreme Court's ruling to uphold the Affordable Care Act affect your ACO?
MD: The primary impact for us as an ACO participating in the Medicare Shared Savings Program is that the Court's decision creates more stability with the CMS ACO work within our organization. Before the ruling, we were trying to work through administratively what would happen if the Supreme Court decided to overturn the healthcare law. Would we still have an ACO agreement with CMS if the Court had decided to overturn the PPACA?
For the time being, we have stability and we have some more comfort in decision making as an organization. However, we recognize that the PPACA is open to legislative changes in the future.
BC: I think regardless of the Supreme Court ruling, the industry has to look at how we redesign ourselves to provide more value to our patients and our communities. We needed to be on the path of healthcare redesign, marching in this direction.
DG: It certainly means that the contractual relationship we have with the Center for Medicare and Medicaid Innovation is unaffected. I suppose if they would have thrown out the entire PPACA that would have opened up a whole can of worms on the contract we have in place.
However, I think the political environment is such that we don't know what will happen in the next year. What I explain to people in our organization is that politics is not predictable. The regulations and legislations we will have to live with are also not predictable.
What is predictable is that our patients and communities want greater value for healthcare. Our focus is on delivering that greater value for our community. We define this as a safer environment of higher quality with greater customer satisfaction at an acceptable cost.
Q: Where do you see your ACO five years from now?
DG: In the ideal world, we would have converted from one payment methodology that pays for volume to another that pays for value. And we would be achieving the triple aim: doing a better job of preventing illness; a better job of delivering a redesigned patient care experience for sick people; and flattening the rate of cost increases. We would be doing all this while still having a thriving organization that finds a way to be financially sustainable. That's what our ACO intends to achieve. Those are pretty lofty goals and quite difficult to accomplish — but I believe we have a pretty good chance of doing it.
CL: I am hopeful that five years from now our collective focus will be on the reduction of poor health and disease. We will have used the time to build a sustainable healthcare system.