There is much to debate in drafting healthcare reform legislation: who to cover, how to cover them, how to pay for it, and who will pay. But one thing seems clear: The current provider payment model that is based on a fee-for-service chassis is going to have to change. The inherent incentive to do more than may be necessary coupled with inadequate accountability for the quality of care or health outcomes are two major reasons for rethinking the nation's dependence on the fee-for-service model.
Accountable Care Organizations ("ACOs") are being proposed as part of Medicare payment reform and are also being considered by some commercial carriers as a mechanism to shift responsibility to networks of hospitals and physicians for "bending the cost curve" and improving quality. Is your organization (either hospital or physician group) ready for a world of ACOs? Regardless of the organizational model selected, here are the top ten questions to discuss among senior leadership to identify action items to prepare for the "new world."
1. Do you have the ability to aggregate clinical and financial data from community physicians as well as hospital(s), pharmacies, and independent diagnostic centers? Clinical integration, including a robust data warehouse, will be an absolute necessity if you expect to be an ACO..Real-time reporting with alerts and reminders based on evidence-based guidelines and benchmarks—at the point of care—will be critical. Longitudinal analysis of costs and outcomes across episodes of care as well as across populations of patients goes well beyond the capabilities of most hospital or medical group decision-support functions today.
2. Do you have the culture and discipline necessary to measure and enforce clinical and service standards? This isn't just a "brush-up" on traditional medical staff peer review. This means creating a discipline that is less forgiving about inconsistent application of established standards and protocols. It requires timely information (e.g., "report cards") as well as timely feedback loops and education. It also requires enforcement of sanctions if expected behaviors/outcomes are not being met. This will apply to physicians, clinical staff, and administrative leadership.
3. Do you have a culture that embraces and encourages a relentless pursuit of improved quality and efficiency in care delivery? Achieving the types of cost savings likely to be demanded will require rethinking traditional ways of delivering patient care. This starts at the physician office and includes every component of care along the continuum. It truly begins in the patient's home, where efforts to engage patients in taking responsibility for their health and self-care will be ever-more important. The way that most patients interact with our healthcare system hasn't fundamentally changed in 50 years, despite advances in technology and changing demographics. While there are some models that may hold promise (e.g. medical home, wireless technology), the successful ACO will continually promote innovation in search of "a better way" to delivery clinical care.
4. What is the depth of physician leadership to assist in driving this change? Clinical integration, care delivery redesign, development of clinical guidelines, and reporting—all necessary components—require a deep bench of clinical leaders. Today there is too often a dependence on a few physicians who are continually relied upon to drive change. Developing emerging leaders through education and empowerment will be critical steps to be accomplished sooner rather than later. This includes physician leaders as well as other members of the clinical team such as nursing, pharmacists, social workers, and educators—and yes, even administrators.
5. How do you currently interact with your community? As providers, generally we prepare ourselves for the times when patients come to us for care or advice. But in an ACO world, we will need to think more about the general population in our community—how do we reach out to them even if they do not need medical care right now? What opportunities for electronic communication, home monitoring, or other forms of interaction have we implemented? How robust is our patient web portal? Do we really live our mission statement (which in many cases is to "improve the health of the communities we serve")?
6. How honest are you in assessing what you really do well (and not so well)? In today's world, the incentive is to provide as broad an array of services and capabilities as possible in an effort to capture as much volume (and revenue) as possible. But in an ACO world, it is likely that you will want to take a much more objective view of what kinds of services you should be offering versus those that you should contract with others in the community to provide—who can deliver better outcomes more efficiently. This is the time to truly evaluate, for example, whether you should be providing open heart surgery or whether another community provider is really more capable of delivering the outcomes and efficiencies required in a global payment environment.
7. How close are you to having a "care management" culture to address the continuum of care? Do your case managers work closely with hospitalists and other physicians in assuring that the most efficient care is delivered both in and outside the hospital (e.g., follow-up appointments, alerts for repeat admissions, etc.)? Do your primary care physicians have mechanisms to identify problem signs in patients with chronic disease (e.g., ED activity, specialty referrals required, etc.)? Case management, where the focus is on managing patients who present with complex problems, needs to evolve to care management, where potential problems are identified before they result in expensive care. Ultimately, this will require the capability to do predictive modeling to identify both individual patient risks as well as more general trends that impact health status of a population.
8. Does your approach to capital decision-making include consideration for the potential of the project or equipment to improve efficiency or enhance quality—or both? Traditional ROI models that assume a consistent revenue stream based on today's payment structure could lead to decisions that may be appropriate in the short-term, but fateful for the long-term. Assumptions should weigh the risks of a rapid change in payment structures. And leadership must weigh the pros and cons of investing in the future (i.e., IT and care management infrastructure) versus investing in the present (e.g., more imaging equipment).
9. What incentives are built into your compensation structures? Productivity models (e.g. wRVUs for physicians) work well in a fee-for-service environment, but if payment requires efficiency and quality outcomes, is your incentive structure going to facilitate achievement of the desired behavior and results? Also, a review of incentives for administrative leadership may be warranted—do the incentives reward "silo" performance at the expense of system-wide performance?
10. How informed is your board, medical staff, and middle management? Moving toward systems of accountable care requires all oars moving in the same direction, at the same time, and with a consistent effort. That won't happen unless everyone knows that the rules are changing. The change in mindset and definitions of success will not happen overnight, and in fact will likely take years. Assuring that all participants have a view into the future will facilitate effective change.
The concept of ACOs requires an organizational culture of mutual accountability based on individual responsibility—with a focus on optimizing the health (not just the medical care) of all patients. Are you ready?
Laura Jacobs is a senior vice president with The Camden Group, a hospital and medical group consulting firm in El Segundo, CA. For more information on preparing your organization for ACOs, call 310/320-3990 or e-mail ljacobs@thecamdengroup.com.
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