Q&A: Methodist Health CEO on an ACO Alternative

Widespread concerns over accountable care organizations have health leaders pondering how to proceed. While the Centers for Medicare & Medicaid Services last month unveiled a number of enticements, some providers aren't biting. They're exploring alternatives.

Methodist Health System and Texas Health Resources announced recently an agreement to study the possible creation of a multi-provider accountable care organization. For now they plan to skip the formation of an accountable care organization as presented in the Affordable Care Act. Instead the two will explore other models of collaboration.

Recently Stephen L. Mansfield, PhD, president and CEO of Methodist Health System, sat down with HealthLeaders Media for a telephone interview. He talked about the new partnership, future prospects for ACOs and what he thinks it will take to make the ACOs successful.

Q: What is happening with the Methodist Health System and Texas Health Resources partnership?

A: It's been in place less than a month. We have several groups that are meeting to look at what our working strategy might be. We plan to explore a variety of opportunities that will be good for our community from a cost and quality prospective. Together we may look at bundled payment strategies or readmissions, or we may partner on a facility. We just don't know yet what all we will do together.

Q: CMS just announced new initiatives for ACOs; will they help attract more participants in ACOs?

A: I think the three things CMS has done are positive. I don't know that I think they are enough to get the energy level and enthusiasm level back to what it was a year ago in the industry.

When this all started everyone was saying there would be 400 to 500 ACOs; now the scuttlebutt is 100. That's unfortunate because in my mind there are more than 100 organizations that are already there from the standpoint of having all the components parts to be an ACO today.

The new initiatives won't help Methodist Health and I don't think they will help many in the industry. It's a direct appeal to a targeted few that CMS really needs to get involved in ACOs early so they can get some positive momentum going. I think it's a move to get those organizations that already function like ACOs to go ahead and commit.

As I understand it based on reading a synopsis, ACO Pioneer is for organizations like Cleveland Clinic, Geisinger Health and Kaiser Permanente that are already involved in coordinating patient care. These organizations have been functioning for decades like ACOs. That doesn't help us.

The second level, the accelerated payments, is really for organizations involved in the Medicare shared savings program. Methodist Health isn't so that doesn't help us and I don't think it will help most hospitals.

The third level, which we probably will take advantage of, is the accelerated development learning sessions that CMS will conduct to help the field migrate toward ACOs. Education and training might help get more hospitals interested in ACOs.

Q: So these initiatives haven't changed Methodist Health's position that it will not participate?

A: Unless something changes, our first overture for an ACO will be on the commercial side in 2014, not in Medicare in 2012. Our plan has always been to perfect the skill set with our own employees and our insurer then we'll move to the community and work with other employers and insurers. Then maybe we'll have a structure in place to take on Medicare.

We're encouraged with the results from our own employees who have chronic conditions and benefit from having a medical home and more longitudinal care. On the carrot side, we created an incentive where for every quarter they are compliant with their plan they receive a $250 bonus. As long as they are compliant their copays are waived. On the stick side, if they fail to comply they pay 20% more for their health insurance than other employees.

I think you can build in accountability systems for people who are paying something for their health insurance because they will have to pay more if they aren't compliant. I don't think it can be done the way Medicare is set up within the ACOs.

Q: Is the government model of ACOs sustainable?

A: I see the ACO as described by Elliott Fisher and others as a good model. This is a huge transition. For an industry as big as ours there are going to be fits and starts. This will probably evolve over the next decade or longer.

What concerns a lot of us is that you won't know what Medicare members are in your ACO until after the fact. Members can decide not to participate.

The one person who has zero accountability in an ACO is the patient. Physicians will tell you that patients go home from the hospital, they don't fill their prescriptions or follow their diet regimen and then they end up right back in the hospital. There's nothing that I see in the ACO regs that makes the patient take accountability for care. I don't think it's going to work until we figure how to make patients have some degree of accountability for their personal care.

And, in my view, ACOs won't work until we figure out how to treat chronic illness differently than acute care illnesses. In our system we treat everything like it's an acute illness. We aren't structured as an industry to do a good job of dealing with people with complex chronic illnesses. We need to create a longitudinal model rather than an episodic model that cares for these people over time. How do you do that if you don't know for sure what patients are in your ACO?

Q: What's at stake if ACOs don't succeed?

A: I don't want to come across as cynical. I think the ACO concept is a very valid construct that holds the most promise for us to be able to improve the value of healthcare in America of anything I've seen in my career but it's just a concept. We've got to tweak it until we get the methodology right.

My personal opinion is that we need ACOs to work. I hope we're all going to stay in the game and continue to move our organizations to make the moves that will help ACOs succeed.

If this doesn't work then there will be a dramatic reduction in reimbursements for Medicare because the program is running out of money.

Listen to an audio interview with Stephen L. Mansfield, PhD, president and CEO of Methodist Health System.