Private-Sector ACO Development in Northern California

During the afternoon breakout session at the HCI Executive Summit, Simon Jones, director, ACO IT and program strategy at Blue Shield of California, discussed the health plan’s experience in the ACO arena. Jones noted that healthcare is on an unsustainable path: there is no sustainable approach to reducing costs and improving care, and incentives do not promote a long-term, system-wide approach.

BSC has set out to change that, by working with hospitals and medical groups to establishing ACOs. (See Rajiv Leventhal’s article, Playing Nice in Healthcare, for more details on how payers and providers are working together.) It established nine ACO in California after teaming up Hill Physicians Medical Group and Dignity Health to set up its first ACO in 2010. It plans to open five to seven more by the end of this year.

Jones said the concept of its ACO model is relatively simple: get together with hospitals and medical groups so that all stakeholders share in the risk pool. “We have tried to get the integrated model. It starts with discussion, trust, governance, and hard work,” he said. In the integrated delivery model, the partners align their incentives, so that each partner contributes to cost savings and is at financial risk for any variance from the targeted cost reduction goals. Jones said the ACOs have been seeing significant reductions in patient readmissions. 

Jones said that that setting up an ACO is hard work for all partners, and it doesn’t get easier over time. Building trust and a governance structure between parties is very important, and the conversation of governance was not easy, he said. Other necessities included transparency (BSC shares data with its partners). Data mining is key to finding opportunities for savings, he said. If BSC sees an opportunity for savings, it will share it with hospital and medial group.