Ready or Not, Reform Under Way

Advocate, for one, is hedging its bets on reductions in utilization and reimbursement cuts by developing
an accountable care organization business model.

“The real fear is that you have reductions in utilization and unit price at the same time,” says Manning, the lead advisor for this report. “That’s the double whammy that could really make it unsustainable for us as provider organizations. So we are very much looking at ACO models as the way to get back some of the savings that would be otherwise taken out of utilization.”

On the negative side of the equation, an interesting data point revealed in the survey concerns the 43% of healthcare leaders who say their facility will likely cut services as a result of PPACA and the 55% who say they will cut staff as a result of the law.

Advocate, says Manning, is attempting to avoid that fate by embracing the new theme of accountability for outcomes via its ACO structure. Through a partnership with its biggest commercial payer, Advocate has taken on 215,000 attributed lives and also has 150,000 full-risk, commercially insured HMO patients.
“It’s about a fourth of our total business, maybe a little more,” says Manning, adding that he expects it to grow rapidly. “Over the next two or three years, we hope that 75% of our business will come through ACO-like structures that will all be a little different. But foundationally, we will have one approach to the care delivery model, so it doesn’t really matter what specific contract plugs into it.”

Though Advocate is on the leading edge of ACO adoption, it’s far from alone in seeking ways to take advantage of the new model by being an early adopter. Still, a significant 32% of respondents feel the ACO concept, regardless of model, will fail, while another 36% believe a commercial model, either current or to be developed in the future, will succeed.