Survival Of The Fittest: ACO-Style

There are three core principles that ACO must strongly pursue in order to survive.

They must be a provider-led organization with a strong base in primary care.

Providers should have a strong leadership position and be collectively accountable to the Triple Aim for their patient population.

Dr. Richard Parker, Chief Medical Officer for the Boston-based ACO explains that a primary care physician leader is needed to communicate with colleagues about care management and utilization of services. Primary care recognizes how to manage a patient’s health on a fixed budget.

Primary care physicians are faced with balancing the budget, as well as delivering quality care every patient visit. This has been part of our responsibility for the past several decades.

When a patient needs to see a specialist, the primary care provider can refer them to the appropriate specialist, who will then communicate back what diagnoses and care plans they determined for the patient. With this kind of communication and coordination, the patient will more than likely receive the most cost effective and quality care needed. This will also, bring more appropriate care, to patients, than they are presently experiencing.

Payments should be linked to quality improvements – called” fee for value”.

The problem is not that people have diseases, like diabetes, it’s the number of poorly controlled diseases that creates staggering costs. If we bring diseases under control, then other procedures and conditions, like amputations, kidney failure, blindness, etc. will decrease dramatically. The key is to treat diseases adequately to drive down costs.

I once heard the former Medical Director of IBM tell of an employee, at IBM, who cost them a million dollars in one year because of uncontrolled diabetes, requiring 17 specialists! The problem is that this situation is not unusual.

ACOs are paid for service and value. A significant revenue stream will be based on how much money they save Medicare. This new payment mechanism is called “Medicare Shared Savings Plan”. If Medicare pays less than expected for a patient population, they will share some of these significant savings with the ACOs who created the savings.

Additionally, ACOs can earn bonuses if spending on patients slows enough to exceed a target. This “slow-down” effect is a result of patients becoming healthier and receiving better care. Improved quality will inevitably lead to lower costs. This quality is the value Medicare is looking for from “fee for value,” not just service.

Bolster data collection to determine the quality being provided and stimulate better quality.

Through this data, it must be proven that patients are not being restricted from any care. The ACA has built this whole argument that we are going to save the culture of healthcare billions of dollars, not because we are going to restrict care, but because we are going to align finances with quality to motivate us to improve care.

This kind of data is critical for an ACO’s financial success. One patient’s disease level, cost of care, and quality of health care produced will determine how much money a system is paid for that particular patient for that year. A provider is no longer paid for each time a patient walks through their door.

I believe that data collection could easily cost hundred of billions of dollars. Payment for providers depends upon the measurement of disease for each individual, how frequently they came into the office, how many healthcare services were used, how much money was spent and saved, how well the patient is doing etc. This amount of data is staggering and it has to be communicated from an individual provider’s office, through a handful of people and eventually to the ones who are paying the bills.

Besides this data collecting determining my financial outcomes, it also had a personal impact. When my office was still on paper charts, no one could easily look at my patients and determine how well of a job I was doing. Once we moved to Electronic Medical Record System (EMR), anyone who was appropriate could access my patient’s data and see which of my diabetic patients were being poorly controlled. That had more impact on me than I expected.

Being able to take valuable data and compare one doctor’s efforts to another was enough to get me working harder. We are all hard wired to do well and try not to come in at the bottom of a group. So once my results were transparent, I automatically worked harder to do a better job. This kind of accountability works for all of us.