ACO Risks and Rewards

Last month, Lisa Bielamowicz, M.D., a practice leader at the Washington, D.C.-based Advisory Board Company, co-presented a webinar on the opportunities and challenges facing clinicians and provider organizations who might choose to participate in a new program created under the federal healthcare reform legislation passed in March of this year, the Patient Protection and Affordable Care Act (PPACA). One section of the PPACA authorized the creation of a program for accountable care organizations (ACOs) under Medicare, to open on January 1, 2012.

As hospital, health system, and physician group leaders examine the issues facing them should they consider applying to become part of this shared-savings program under Medicare. Bielamowicz says they need to think strategically about their strategic assets and liabilities going forward. She spoke recently with HCI Editor-in-Chief Mark Hagland regarding ACOs, and the information technology challenges their would-be creators will face in the months and years ahead.

Healthcare Informatics: How did you, and the Advisory Board Company, become involved in advising providers on ACOs?

Lisa Bielamowicz, M.D.: We have 3,000 hospital organization members, representing over 80 percent of all acute-care hospitals larger than 80 beds, in the U.S. And we’ve expanded to offer a host of operational strategy and IT implementation solutions for our members, and more consulting-like implementations, to be more hands-on with our members. I focus on the physician space, so I’ve led a lot of our best-practice work in the accountable care space.

HCI: So you’re basically offering strategic consulting in this area?

Bielamowicz: Our work includes that, but we still do best-practice research also.

HCI: So, what are you learning, and telling members?

Bielamowicz: Right now, we’re in the middle of our annual CEO meeting series, where we bring together groups of hospital and health system CEOs across the country, and the meetings—we’ve had more than 20 so far—have been focused on accountable care. This is, bar none, the area of the most interest to hospital CEOs right now. The genesis of the ACO idea came out of market-driven changes; but now that we have a healthcare reform bill on the books, the bill is the catalyst, and now, organizations have to respond to it.

So we’re helping them to baseline their organizations to determine whether and when they might jump in. And they’re also looking at possible models. The reality is that even organizations that essentially already have ACO-like structures, will have to make major adjustments going forward. In fact, nearly all organizations on this path will be in the uncomfortable position of having one foot in both boats for some time [i.e., will be paid via both normal Medicare fee-for-service reimbursement, and ACO reimbursement, at the same time].

HCI: Isn’t one of the challenges that federal authorities haven’t yet populated the whole language of the legislation?

Bielamowicz: That’s true, but if you’re viewing this through the Medicare lens, there is a pretty hard and fast timetable. This program is a program, not a pilot or demonstration, which means that if any organization meets the ACO definition under Medicare, they can receive a contract under the program. And the start date for this is January 1, 2012. So if you want to get a large part of your reimbursement from this program, you need to start planning now.

HCI: What percentage of reimbursement might come through this program?

Bielamowicz: Some organizations now have a number of elements. Organizations like Kaiser [the Oakland, Calif.-based Kaiser Permanente] and Geisinger [the Danville, Pa.-based Geisinger Health System], and organizations like several in Southern California that receive a large percentage of their reimbursement through capitation; a number of organizations in Minnesota—might be able to do this. However, apart from completely closed systems like Kaiser, there are very few that are totally ready yet. Intermountain [the Salt Lake City-based Intermountain Healthcare] and Geisinger would be an example of the next level down. And even Geisinger has only 42 percent of their patients in their Geisinger plan. And I can tell you that organizations like Kaiser, Geisinger,and Intermountain still feel they have room to be successful under this model; they’re looking at things like the medical home and primary care-based models.

HCI: So what should organizations be doing right now?

Bielamowicz: They should be working with their boards and senior executive management teams to look at these models. Ninety percent of organizations appear to be interested in this in some form. But whether you have the market penetration, the physician relationships, and the organizational structure to transition to an accountable care organization, those are questions you have to look at; or whether you should partner with organizations around their markets. And many organizations are transitioning their thinking to crystallize it around this. But many organizations in their market don’t have the gravity in their markets to do this yet.

HCI: I spoke recently with Chet Speed, vice president, public policy, at AMGA [the American Medical Group Association, Alexandria, Va.] about this. He said definitively that ACOs will not be run by hospitals.

Bielamowicz: Well, I have a slightly contrarian viewpoint on that. First of all, most definitions recognize that physicians can form accountable care organizations, apart from hospitals.

HCI: Speed contends that physicians must lead this regardless of whether hospitals are involved.

Bielamowicz: Well, it’s probably not realistic to expect in markets that don’t have dominant physician groups, that very small physician groups of one or two physicians will be able to pull this together. You’re going to have to have an aggregator. Now, of course, at the care delivery level, many ACOs will be physician-driven. But I think the strongest ACOs will be formed through partnerships between physicians and hospitals.

HCI: So won’t there be tremendous tension between hospitals and physicians on this?

Bielamowicz: There’s always been tension between hospitals and physicians. However, I’ve actually been impressed between some of the proactive, productive collaborations taking place now between physicians and hospitals. And many physicians are in rather precarious positions right now. And if you’re a busy, independent practitioner who’s in the office or the OR for 10 or 12 hours a day, you don’t have the time or bandwidth to figure out what these elements mean for you. And I think that that instability means that many physicians will be looking for a port in the storm. I think there will be some tension, but there will also be a lot of cooperation and alignment.

HCI: Clearly, there is tremendous potential here, but I think there could be a lot of tension over money.

Bielamowicz: No doubt about that, but this is also about reducing costs in the healthcare system. And I think we’re just as likely to see physician-physician tension, with primary care physicians saying, ‘Right now, I make two-thirds, or less, of what a baseline specialist makes,’ and there will be tension in that area, too. And it will be difficult for everyone, but there is great potential here.

HCI: Clearly, there will be a tremendous need for good data, data analysis, correct?

Bielamowicz: I think the level of connectivity and access to data that we’ll need will be one of the critical factors that will set this apart from what happened in the early 1990s with capitated risk. I mean, the idea that we could manage care and costs when we were still completely on paper, now seems absurd. That said, I think that data can also be a hindrance, because it can be overwhelming. And particularly with physicians, this will be key. Physicians are data-driven animals, and they will bring up their outcomes. But you also have to show the physicians that the data is relevant, and you will have to present it in a succinct, actionable way. And it has to be actionable and peer-led.

HCI: What do you think the timeframe will be for a large plurality of hospitals jumping into this?

Bielamowicz: It’s very difficult to predict; but there are obviously factors that will advantage a system. Among the factors are, if you have a direct relationship with a payer/insurer; and, obviously, a large health system will be advantaged over a standalone hospital; and organizations that already have a strong alignment with a physician base, not necessarily salaried physicians, but a strong alignment, will be advantaged; all those things would help.

Two-thirds of our members would say they’re actively considering the ACO shared-savings program. But the number that will fully realize that vision a few years from now will still be pretty small. And you have to define what an ACO is—what is your checklist? The vast majority of organizations, even ones that will ultimately be successful, will still be managing across an incentive divide, and managing that transition, in three to five years.

HCI: Any thoughts specifically for CIOs?

Bielamowicz: First of all, I think that for the CIO and the entire hospital IT enterprise, this is really your moment. IT is going to be the backbone of the entire organization; you’re not going to be able to do this without access to critical data from across your organization. My advice would be that, first of all, your job is not a hospital job anymore; you’re managing IT across the care continuum, and that level of connectivity is going to be critical. And you’re also going to need to be connecting outside your organization as well. And the organizations that will connect regionally will ultimately be the most successful at managing population health.

CIOs will need to be top-notch communicators, in being able to operationalize IT and chart the best course forward for their organization. IT cannot exist in a silo anymore; the CIO who is going to be relational with their organization is ultimately going to be the one who’s going to be successful.