Accountable care organizations in 'very early stages' of growth

Health reform component has potential to improve quality, safety

Of all the recommendations of the new health care reform law, perhaps the one with the greatest potential for widespread improvement in quality and safety is the accountable care organization, or ACO, according to some experts. Although outlined in the new law, experts are still seeking universal agreement on exactly what is envisioned and how they will operate, but ACOs already are being formed, and as they mature, agree observers, the model will become clearer. Right now, physician organizations and hospital organizations seem to be jockeying for position, each asserting that their constituents should be the key players in ACOs.

In short, an ACO is "a provider organization that takes on responsibility for meeting the health needs of a defined population, including the total cost of care and the quality and effectiveness of services," according to a report recently published by the Commonwealth Fund and written by the leaders of the health reform movement in Vermont.

A number of organizations pursuing ACOs, including the Vermont Health Care Reform Commission have adopted the Institute for Healthcare Improvement's (IHI) "Triple Aim" outline as they go forward. "Basically it says that true transformative health reform can come only when you optimize three aims concurrently: the health of the population, the patient's experience of care (both the subjective response and the quality of the experience), and the per capita cost of care," explains Amy Boutwell, MD, MPP, director of health policy strategy for IHI. "The observation is that usually an initiative will try to optimize one or two of the components — and that will not get us where we want to be. We have to get out of the tendency to achieve one of these at the expense of one or another."

Also supportive of the "Triple Aim" is the Premier Healthcare Alliance, which has established an ACO Implementation Collaborative, according to Boutwell. "There is widespread agreement that quality and cost measurement is central to determining the success of the ACO and monitoring for unintended consequences," says Wes Champion, senior vice president of Consulting Solutions. "Agreeing to the definition of 'value' is the difficult first step in the measurement process."

He agrees with Boutwell on the need to balance all three components. "All three of these aims need to be balanced and act as counterweights to ensure the ACO delivers true value," he says. "For instance, when cost is the sole focus, you end up with HMO-like care. When satisfaction is the sole focus, you end up delivering care that may or may not be necessary to improve outcomes. The triple aims are what makes the ACO approach different than models tested in the past and will help ensure success."

Boutwell adds that the entity that is able to optimize the "Triple Aim" is an "integrator." "There needs to be a super-ordinate structure that looks at cost, quality, and health across settings and over time," she says. "The word 'integrator' might very well be synonymous with an ACO, and an ACO might optimize the 'Triple Aim.'"

"We use the term 'community health systems' as our version or label for the ACO," says Jim Hester, PhD, director of the Vermont Healthcare Reform Commission. "But there's no real prescription or formula for what it looks like." In other words, he explains, there are a number of organizations that have certain desirable features.

"You have the PHO's — the physician hospitals organizations," Lester says. "They could contract with commercial payers for risk-sharing agreements. There is also a second model, the Federally Qualified Health Center [FQHC], which has a critical access hospital as a wholly owned subsidiary. A third model involves some physician organizations, networks, or IPAs that have been formed and are interested in being ACOs; there is tremendous flexibility."

The ACO, adds Boutwell, can do much for the local population. "It can coordinate care, do preventive care, avoid costly tests and hospitalizations, and that will improve the overall health of the population and quality of care. As the overall payer, an integrator of that care will do well financially by controlling capital costs."

She stresses that while IHI supports the ACO concept in the sense that it recognizes that the role of an integrator across settings over time is a powerful asset, "we are not actively coaching organizations on how to become ACOs."

Establishing goals

While the definition of an ACO is still being fleshed out, that doesn't stop organizations from establishing well-defined goals. For example, says Champion, "We believe there are six core components that need to be included as part of any successful ACO implementation:

1. People-centered foundation. All components should be designed from a people-centric perspective to ensure better engagement, activation, satisfaction, and increased self-accountability for health.

2. Health home. ACOs will depend on a Primary Care Practice (PCP) approach that offers 24/7, 360-degree care management in order to improve outcomes.

3. High-value network. ACOs require a network of non-PCP providers with integration and care coordination functions to optimize patients' experiences as they move across the continuum. It is intended to be a continuous learning system that constantly improves outcomes.

4. Population health data management. ACOs must be wired to enhance the clinical and administrative aspects of care. They must have the ability to use information from many sources to optimize outcomes and achieve business success.

5. ACO leadership. ACOs require a sophisticated leadership function that overcomes fragmentation in health care, including reimbursement arrangements that reward providers for achieving positive outcomes. Leadership models should include joint physician/hospital planning and communications, as well as legal, financial, and medical management.

6. Payer partnership. ACOs need payer partnerships based on deep operational interactions across a wide spectrum of services, including predictive modeling, case management, network and medical management, and financial reporting. This is a deeper and broader relationship than traditional arrangements."

Boutwell says there are a few examples in the United States that offer some clues as to what ACOs will look like. "You have the relatively successful HMOs of the '80s — for example, Kaiser and Intermountain Health Care. You can add Mayo and Geisinger," she says. "They are examples of what are currently called integrated delivery systems." For example, she notes, Geisinger owns and operates a health plan, hospitals, office practices, skilled nursing facilities, and home health care agencies, and employs doctors and nurses.

"If they can improve quality of care delivered in the hospital, they improve the patient's experience," Boutwell notes. "If they can avoid errors and inefficiencies of delivery of care, they save money. The whole can do better and experience better outcomes — financial, clinical, and so on — and no one gets hurt. In today's fee-for-service setup, if you reduce your readmission rate, you lose volume and money for reduced services. What we want to do is make improving health and care delivery rewarding."

Where we stand

While awaiting further clarification from the government on what an organization must do to be recognized as an ACO, health quality leaders are moving forward. In Vermont, for example, the last couple of years have been spent conducting a feasibility study with an eye toward some pilot projects. "We've identified a number of sites interested in becoming ACOs," says Hester. He adds that a learning collaborative at Dartmouth that involved the Brookings Institution provided year-long education for three sites. "We've been doing financial modeling on the impact of ACOs on hospitals, and it all came together in the last legislative session; we passed authorization for the first ACO pilot in the state, starting in 2012 and then adding two more," says Hester.

The potential benefits for hospitals, he continues, include being able to share in the savings that are achieved. "In addition, the emphasis on improving the patient care experience also plays into improving the health of the population, and the ACO will offer a wider range of interventions to help them to do that. And we will see changes like reducing unnecessary admissions, ED visits, and better managing chronic illness."

Premier's ACO Implementation Collaborative includes 23 health systems representing more than 80 hospitals and 1.5 million patients nationwide. The participants will interface both with Premier and amongst themselves as the collaborative moves forward. "Premier continually analyzes member health system performance data as a cohort and individually to identify areas, trends, and opportunities that drive performance and achieve goals," notes Champion. "We also provide educational meetings, resources, materials, and knowledge transfer tools to facilitate communications across participants."

In addition, he continues, "the ACO Implementation Collaborative meets face to face three times a year to share best practices, assess their strengths and weaknesses, discuss the most innovative components of their individual ACO implementation efforts, and prioritize efforts for improvement. Members in specific work groups also meet monthly to build on the six core components."

Collaborative members commit to sharing performance data across the collaborative, notes Champion. "In doing so, participants can easily identify top performers and learn from them to create similar quality gains in their own organization," he explains. "They use a common set of metrics for success, collect hospital performance data, identify opportunities for improvement, and track results over time to prove the value of the ACO model."

Champion says that the collaborative is accepting new participants. "Premier has also launched an ACO Readiness Collaborative for health systems to develop the organization, skills, team, and operational capabilities necessary to become effective ACOs capable of lowering costs," he notes. "Building these capabilities will help them improve care coordination, efficiency, and quality and patient satisfaction so they can deliver accountable care in their communities." He says that more than 55 health systems representing more than 200 hospitals have joined the Readiness Collaborative.

More information coming

Ultimately, notes Boutwell, the government will determine if your organization qualifies as an ACO. "We are still early — really, really new," she says. "During the health reform season, the ACO really came on to the radar screen, and there is language in the actual bill. For example, it says there can be demonstrations, and CMS [the Centers for Medicare & Medicaid Services] will pay them differently if they manage efficiently over time."

There will be specific guidelines on what ACOs will generally look like, she continues, "but the important thing is that the bill recognizes an ACO in downtown Boston will look different from one in rural Kansas." While the federal government will need to define specifics for Medicare, she continues, "at the same time, hospital leaders will hear talk in their own areas — for example, their own organization may be forming an ACO — especially where hospitals are affiliated with each other and with physicians."

[For more information, contact:

Amy Boutwell, MD, MPP, Director of Health Policy Strategy, Institute for Healthcare Improvement, Boston, MA. Phone: (617) 710-5785.

Wes Champion, Senior Vice President of Consulting Solutions, Premier Healthcare Alliance. Phone: (877) 777-1552.

Jim Hester, PhD, Director of the Healthcare Reform Commission for the Vermont State Legislature, Montpelier, VT. Phone: (802) 734-1649.]