Q&A: Aetna's Charles Kennedy on Developing ACOs

HLM: How are the ACO contracts implemented?
Kennedy: The ACO contracts have to be multi-year because we are trying to reengineer the care delivery process and that can't be done in one year. We like a five-year relationship but we'll work with anything in the three- to five-year range.

We start out with a conversation: Where do you want to go? What's your vision? How do you see yourself achieving your vision? Once we understand that, then we talk about accountable care and what success in the accountable care contract requires.

Finally we focus on finances. What we are trying to do is take inefficiency out of the healthcare delivery system. We're trying to get rid of care that doesn't help people—and maybe even hurts them.

We're having a fundamental impact on the finances so we have to develop a plan that allows rewards for increased efficiency and doesn't harm the financial stability of the delivery system. That takes years to put in place.

HLM: What about risk sharing?
Kennedy: We have a variety of risk-sharing strategies that are customized to the needs and capabilities of our delivery system partners. We have some approaches where the risk-sharing is relatively small.

More experienced delivery systems that may have been involved with an HMO operation and have a deep understanding of risk management might take 80% of risk right off the bat.