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Norton, Humana Commercial ACO Notches Cost Savings

Jim Molpus, for HealthLeaders Media, August 8, 2011

In its most simplified form, the idea behind accountable care organizations was to get the healthcare providers and payers in a community to work together to improve care while also reducing its cost. Much of that purity has been lost in the noise of the ACO movement, but in Louisville, KY, Norton Healthcare and Humana are continuing the journey.

Norton, with five hospitals and more than 2,000 physicians, and health plan Humana, headquartered in Louisville but with 10 million members nationwide, began discussions of forming an ACO in 2009, “when we had no idea what an ACO really was,” says Steven Hester, MD, Norton’s chief medical officer.

Norton and Humana have formed the area’s first commercial ACO and together form one of five sites nationwide participating in the Brookings-Dartmouth ACO pilot study. But what started their discussions of working together was a shared philosophy, Hester says.

“I don’t see it really as just an ACO structure,” Hester says, “but how do we provide value. How do we change? How do we look around and see who the partners are who can help us move the agenda forward.”

The pilot study focuses primarily on the 10,000 Norton and Humana employees in the market, with other commercial plans to be added. So far the team has worked through the governance issues such as physician participation and financial modeling, as well as the performance reporting and reconciliation of shared savings.

The pilot has begun to track improvement along several initiatives, including a joint replacement accountability study that has seen a 7.3% reduction in direct variable cost, a 6.7% reduction in length of stay, and a 13% reduction in 30-day readmissions.

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