Population Health Management Necessarily Leads with a Loss

Launching multiple value-based care ACOs when the reimbursement environment is still supporting fee-for-service is a financial risk, he acknowledges, but the system is counting on a few tactics to buoy it during the next few years.

"We fully expect that our revenue is going to go down, so we've got other programs in place," he says. "[Our strategy] is not only cost-cutting; we're also active with our growth strategy. We need to get bigger in order to spread our costs across the enterprise."

In 2011, in anticipation of more expansion into ACOs, Iowa Health aligned with Methodist Medical Center of (Peoria) Illinois. It was the first "senior affiliate," as Iowa Health refers to its major affiliations, added to the system since 1999.

"We know if we can align with other entities that are similar to our size that it has a significant impact around the overhead costs allocated to all our affiliates," Vermeer says. "We know most of the cost on the system-side is fixed, with minor variable costs, so there's not a lot of additional cost associated with additional affiliates. So we're actively looking to align with other organizations."

Other areas of focus include managing referrals within Iowa Health's owned and aligned organizations, medication therapy management, and palliative care.