ACO or Not, Fairview Builds Shared Savings into All Payer Contracts

Philip Betbeze, May 23, 2011

No matter how much senior healthcare executives might discount the government's ideas and regulations surrounding accountable care organizations, the fact that care can be provided more efficiently and at less cost is undisputable. But that doesn't mean you have to follow a Centers for Medicare & Medicaid Services-approved recipe to get there.

For skeptics, there's Fairview Health Services in Minneapolis. Leaders at the system knew, based on quality metrics, that it provided the highest quality care in the region, says Dave Moen, MD, the president of Fairview Physician Associates, the health system's physician alignment division. But the system isn't concerned with what acronym is used to describe its demonstration of value to its patients and payers. The big question was how to get paid for it.

"We had the highest quality and the lowest cost in the area," he said, relating that negotiations on a new contract between Fairview's CEO and his counterpart from Medica, a 1.6-million member health plan based in Minnesota, had reached a standstill.

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To their credit, the two didn't result to sniping at each other through the media. Instead, they changed the conversation.

What came out of it was a $10 million incentive, combined with a shared savings mechanism aimed at cutting costs and improving quality in the new contract between the two organizations. Fairview wasn't content to stop with one payer contract, however. It pushed for the model to be included in all its contracts with payers.

"We took that model for shared savings and quality and gradually embedded the concepts into all of its commercial insurance contracts," said Moen, starting in January of this year. "It covers all lives associated with that payer, but there are some outlier provisions."

Clinically the shared savings model has already demonstrated improved outcomes in managing diabetes, hypertension, and cardiovascular disease, says Moen.

Philip Betbeze

Philip Betbeze is the senior leadership editor at HealthLeaders Media.

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