Forging a New Era of Accountable Care

January / February 2012

Forging a New Era of Accountable Care

The country’s current healthcare system is fiscally unsustainable. The United States spends more of its gross domestic product (GDP) on healthcare than any other country, yet ranks only 37 in performance, according to the World Health Organization. Furthermore, healthcare spending is expected to increase from $2.6 trillion to $4.6 trillion by the end of the decade. As a result, new approaches to healthcare with the goal to achieve the Triple Aim—enhance quality, reduce cost, and improve outcomes—have started to emerge. This industry shift includes models of care where all constituencies—patients, payers, providers, hospitals, and physicians—share risk and reward through an alignment of goals and incentives. This holistic, collaborative approach to care delivery is known as accountable care and will drive the healthcare system to achieve long-term sustainability.

The Centers for Medicare and Medicaid Services (CMS) have taken a step in the right direction by developing the Medicare Shared Savings Plan, which encourages providers to create Accountable Care Organizations (ACOs). In October 2011, CMS released the Final Rule to the Medicare Shared Savings Plan, which laid out the requirements and incentives for providers to participate in ACOs. The CMS-defined ACO is a viable solution for healthcare organizations that are seeking a path to pay-for-performance care delivery, facing commercial market pressures that require them to modify practices, or developing an infrastructure for population health. CMS’s efforts are an encouraging movement for an improved healthcare system. However, the ACO is not a one-size-fits-all solution. We still have a complex healthcare landscape with a long road for providers to navigate in order to achieve long-term sustainability.

The Right Path to Sustainability
The first step to achieving sustainability is to understand the end goal of these new approaches to care. Providers and payers should be working to create sustainable health communities: clinically integrated, financially viable health systems that increase the quality of care, improve patient experience, and lower overall healthcare costs. In a sustainable health community, providers, patients, and payers work together to deliver high-quality healthcare that meets patients’ needs in the most affordable way—with the resources, tools, and incentives to affect positive change and to make it lasting. Achieving sustainable health communities will only be possible if the healthcare system is aligned, connected, and intelligent.

  • The intelligence is driven by clinical, financial, administrative, and proprietary data and analytics gathered from all parties. Sophisticated analytics create actionable intelligence to inform all health system processes, operations, and clinical activities at the point of care.
  • Connectivity efforts focus on building a comprehensive technology infrastructure that connects all participants across a sustainable health community to share critical information and measure performance. Successful models of care will utilize technologies from electronic health records (EHRs) to health information exchanges (HIEs) that enable access and exchange of information and connect the tools and systems to integrate often disparate systems across the sustainable health community. This will offer all constituents a holistic view of consumer health and resources, which has been sorely lacking from most current models.
  • The alignment of needs and incentives among all participants is, by far, the most critical element of a sustainable health community, and yet it is also the most difficult to achieve. Previous health reform efforts have focused primarily on financial engineering and have largely failed to align with the disparate economic interests of health system participants, the new and innovative forms of clinical and medical engineering, and the populist perspective that healthcare should be focused on care and not cost. Positive change will occur when all constituencies share in both risk and reward.

Now That We Know Where We’re Going, How Do We Get There?
With a clear vision of a sustainable health community in sight, hospitals and health systems must assess the needs of the population and its current capabilities. Sustainable health communities take a population perspective involving the the entire community—from hospital-employed and independent physicians to pre-acute and post-acute care facilities, from patients to employers to payers. Care will not only focus on the care of sick patients, but also on how to prevent illness and encourage wellness and prevention—reducing unnecessary tests, adverse drug reactions, and common errors, and assuring that patients get the right care at the right time. Achieving this level of collaboration will require new technology systems. Providers should take a good look at their existing tools to determine how they can better leverage the technologies available in today’s healthcare market.

The new era of accountable care is now possible because of the development of advanced information technologies that enable us to monitor and share patient data across the continuum of care. Previous failed efforts to transform the healthcare system, such as managed care, were not supported by the technological capabilities necessary to facilitate a truly collaborative approach to care. Tools such as electronic health records (EHRs), health information exchanges (HIEs), and computerized physician order entry (CPOE) will enable integrated, customized delivery of care. In addition, providers will need to become comfortable with a group of new solutions—some that the payer community has relied on for years. In new models of accountable care, providers will take on payer capabilities with technologies that enable:

  • Population analytics. Going beyond their own data, providers will need to evaluate the holistic and ongoing health of a local patient population over time, requiring technology systems that stratify the population, offer actuarial capabilities to assess risk, and uncover clinical care patterns and disease trends. Most importantly, these systems identify incidence of latent diseases such as congestive heart failure or diabetes that account for the majority of provider costs.
  • Clinical transformation. Once population heath is managed, providers will need to implement care protocols to improve clinician care in under-performing areas and use monitoring and feedback tools to ensure caregivers are aligning to best practices.
  • Care management. Hospitals and health systems will also need to invest in communication tools that allow patients to take an active role in their care, both preventatively and following treatment, are essential to the success of accountable care models.

These new health IT systems facilitate the development of new models of care that achieve the Triple Aim goals. As providers move toward sustainable health communities, they should examine their current technologies and see what areas need to be improved upon so that they can determine the best systems in which to invest their efforts.

Taking the Plunge Toward Sustainable Health Communities
The journey toward becoming a sustainable health community will be different for every patient population. For change to stick, it must reflect the resources and values that are unique to each community.To determine the correct approach, providers must assess their own unique circumstances, such as the needs of their patient population and existing capabilities for connecting with the community.

Once a health system has assessed the needs of the specific population and the tools at hand, they can move toward becoming a sustainable health community by adopting new models of care that enable parties to assume variant levels of risk sharing based on the system’s individual circumstances. Several new models of care are emerging to scale to various sized populations and design customized shared savings arrangements tailored to the needs and demographics of different communities:

  • The CMS-based ACO. The most widely recognized model of accountable care, this model has the lowest downside. Many health systems will need to adopt it due to competitive pressures.
  • The provider employee model. With this model, health systems “pilot” an accountable care structure by taking on the risk of their own employees. The overall risk level is expected to be relatively low, due to a controlled population and direct access to the covered population for communications, education, and screening. Several of the larger hospitals and health systems—some with up to 30,000 self-insured employees—are currently in the early stages of this model. After the testing/trialing phase, where they’ll manage the population, monitor physician performance, and watch patients closely on a longitudinal basis, these health systems will likely move on to other “flavors” of accountable care models.
  • Payer/provider realignment. Usually found in areas where the performance of the health system is below the national benchmarks, prompting the payers and providers to work together in a more collaborative fashion than in the past in an effort to improve outcomes. This could be a single payer and multiple providers, or realignment within a limited population, and may offer no limited gain share.
  • Expansion of existing risk. Many health systems across the country already share and bear risk. Some have their own health plans, while others have certain physician groups in risk-capped contracts. As they see the potential rewards, they can position themselves to take on more risk. Some organizations have been doing this for a while and, although there aren’t many in this country, there are enough to make it a model to consider.
  • Clinical integration. This model deploys tools and processes that pass FTC “acid test” for clinical integration between hospital provider and physician groups. Physician groups collaborating with hospital systems are subject to strict anti-trust laws and must prove they are clinically integrated with the health system. This is a pre-requisite step for any physician groups and hospital systems that want to embark on a comprehensive collaborative/accountable care organization.
  • Comprehensive. This full risk model involves collaborative participation of multiple providers and multiple payers, potentially including Medicare/CMS, but private payers as well. It engages the community of independent and hospital-employed physicians. We’ll likely see many more of these launch in 2013 and 2014.

By adopting a model of care based on its current circumstances and patient populations, a health system is positioned to evolve into a sustainable health community, where all parties share risk and reward equally, enabling cost, quality, and efficiency to be improved across the healthcare system.

The Burden is Not Just on the Shoulders of the Provider
Regardless of the model of care being deployed, the success hinges on the active engagement and collaboration across all parties in the care continuum. Unlike capitation, CMS’ ACOs, HMOs or managed care, sustainable health communities require that payers, providers, hospitals and patients alike thrive as a result of higher quality outcomes and lowered costs. Sustainable health communities will impact the role of providers, patients, physicians, payers, and pharmaceutical companies for the better:

  • Patients. Consumers today have the ability to influence more than 50% of unnecessary clinical costs. When given information and education about their own healthcare, they can positively participate in their care to improve the quality of their own health, and improve the overall system.
  • Physicians. Currently, one-third of a doctor’s time is spent recording and synthesizing information. An integrated system will provide the access to essential patient data, complex payer requirements, and revenue control necessary so that they can focus on providing patients with the best possible care.
  • Providers (hospitals, clinics, physician practices, etc). Heightened financial and clinical performance pressures, regulatory changes, reimbursement challenges, and maintaining clinician relationships in a dynamic environment make sustainable health communities the only long-term alternative for providers. Accountable care will drive providers toward shared objectives around efficiency and quality.
  • Payers. Under a sustainable health community model, payers will contribute to the nation’s efforts to reduce healthcare spending and arrest spiraling costs. By sharing risk and accountability with providers, they also share the interest in using data about communities and populations to improve quality and can offer a comprehensive approach to patient care.
  • Pharma. Even drug developers can benefit from population analytics, early detection of diseases, and improved pharmacy payment systems—not to mention data-driven program and performance measurement of certain therapies. Sustainable health communities will offer pharmas and biotechs the ability to improve R&D with better insight into a range of patient types, clinical trial recruitment, and new market opportunities.

All parties can achieve the benefits of sustainable health communities only if they are willing to collaborate and share accountability for the quality of care. Primary care providers, hospitals and specialist will need to share accountability for quality of care. Payers will need to partner with providers and patients to align benefits, design products, develop networks, measure results, and share risk. Patients and consumers will need to become active participants in their care and accept accountability alongside payers and providers. All parties will need to align with financial arrangements that include shared savings incentives and payment reforms.

Tucson Medical Center, a Sustainable Health Community in the Making
The nation’s first sustainable health community is underway at Tucson Medical Center. The hospital and local physicians are forging the path to Sustainable Health Communities by adopting a model of accountable care in which hospitals, physicians, residents, employers, and others share in the risk and rewards of making the health system work better for everyone. The health system—Arizona Connected Care, including Tucson Medical Center, and independent physicians in the community—is leveraging technology to enable collaboration and address challenges, ranging from analytics that help measure the quality of outcomes for patients, to secure networks that enable primary care physicians and specialists to share important information about their patients’ care, to consulting expertise that will help build and manage the new business model successfully. The model of care is based on:

  • Development of four Office Centers of Excellence. The Office of Analytics, Office of Technology, and Office of Contracting will be supported by health information, technology, and consulting company OptumInsight, and the Office of Care Coordination will be supported by the population health management expertise of OptumHealth and OptumRx. These centers will provide the analytics to help Arizona Connected Care determine areas in need of change, measure progress, and manage the information and connectivity that are the foundation for relationships among all stakeholders in the health system.
  • Advanced health data and analytics capabilities. Optum will provide the information and connectivity between Tucson Medical Center and its community of independent physicians to ensure information is available to support decisions at the point of care, and that important health information is effectively shared among the people who care for patients.
  • Shared risks and rewards. Physicians participating in Arizona Connected Care will share in the savings resulting from their focus on implementing best practices. Participating physicians have agreed to be measured and rewarded based upon their delivery of high-quality patient care, patient satisfaction, and reduced costs, as well as effective management of care for the chronically ill and efficient transitions of care for patients. Optum will provide the analytical tools that help physicians identify best practices and measure their own performance in these areas.

Tucson’s initiative is continuously growing into a broader model and vision, improving health in the community and the efficiency of the health system. The new capabilities enable the health system to measure how behaviors impact members of the community, establish benchmarks based on national standards, and provide data to demonstrate improved outcomes. Tucson is expected to be the first of many examples of accountable care, as it has become increasingly clear that a major shift in how the national healthcare system operates is sorely needed, and the pieces are now in place for us to move toward a true vision of sustainable health communities throughout this country.

Todd C. Cozzens — Chief Executive Officer of Accountable Care Solutions, Optum — who co-founded Picis in 1994, has more than 23 years of experience in the healthcare technology and information systems industry. It was Cozzens’ original strategic vision of information systems for the high-acuity care areas of hospitals that drove the company’s growth trajectory over 1,500% since 2001. Prior to Picis, he served as the president of a division of Marquette Medical Systems (now GE Healthcare) and held several other senior management positions, including vice president of sales, from 1983 to 1995. Cozzens is a graduate of Marquette University and the Harvard Business School Executive Program for Management Development. He was named Entrepreneur of the Year by Ernst & Young in 2005 and was a four-time member of the U.S. Olympic Sailing Team. Cozzens now leads Optum’s accountable care solutions group focused on helping healthcare providers to design, build and operate accountable care organizations and sustainable health communities utilizing Optum’s leading analytics, population management and care coordination solutions.