Could a Statewide Model Be the Way To Go For Many ACOs, Going Forward?

April 10, 2019
The leaders at Caravan Health are confident that they’ve made a breakthrough in bringing ACO organizations to scale. What might be the nationwide implications of recent developments in this area?

Could an emerging statewide model provide a path to the future for the developers of ACOs (accountable care organizations)? Managing Editor Rajiv Leventhal on Tuesday published an article in which he interviewed two of the senior leaders of an organization that has been created to develop statewide collaborative ACOs; and that organization has developed a model that could point the way to the future for many in U.S. healthcare.

As Leventhal noted, referencing Caravan Health, “The Kansas City-based organization launched the first-ever statewide collaborative ACO in Mississippi earlier this year, and since that first launch, Florida and Idaho have also joined the group of statewide ACOs supported by Caravan Health. The business model, according to officials, involves the state hospital association acting as a convener to engage community hospitals with Caravan Health’s methodology of population health, governance and accountability. Ideally, these collaborative ACOs will allow hospitals to pool lives and achieve the scale necessary for success.”

For his report, Leventhal interviewed Caravan CEO Lynn Barr and Florida Hospital Association senior vice president John Mines. Both executives provided rich detail on both the organizations' core strategies, and their perspectives on what has worked and not, so far, in ACO development.

One absolutely key element here—not surprisingly, really—has to do with the very basic element of size. “According to Caravan Health CEO Lynn Barr,” Leventhal wrote, “the organization had come to learn through its experience in the federal Medicare Shared Savings Program (MSSP) that patients in ACOs can essentially go wherever they want for healthcare services, ‘and we have a very limited ability to control what happens to them. With a lot of hard work you can reduce the cost of care by 1 to 2 percent per year,’ Barr says, adding that Caravan Health once had nearly 40 ACOs it was working with, only to see their results ‘bounce all over the place.’”

As a result, Barr and her colleagues had to rethink the concept of scale; they realized that Medicare ACOs need to cover around 100,000 lives just to achieve that 1- to 2-percent savings threshold, but that in reality, most ACOs have nowhere that size; about 80 percent have 25,000 or fewer attributed lives.

And, as Leventhal reported, Barr and her colleagues found one partner at scale in the Central Oregon ACO, which offered to take on all of Caravan Health’s ACOs, a proposal that nearly every single client agreed to. “The other way just didn’t make sense, and they realized that,” Barr told Leventhal.

The Florida Hospital Association (FHA), which represents more than 300 hospitals in the state, was the second group of its kind to team up with Caravan Health. The new model will enable any of the FHA patient care organizations to participate in the statewide ACO, if they choose. The organization’s senior vice president John Mines notes in an email to Healthcare Innovation that initial success will be measured by the level of hospital participation but “ultimate success will be measured by the ACO’s performance in achieving measurable improvements in a variety of cost and quality measures,” Mines told Leventhal. And he added that the FHA will be a “convener to introduce and connect our members with Caravan’s collaborative model of ACO care delivery. Caravan will bring proven expertise and programs around practice transformation and improvement, data and analytics, network development and accountability/compliance.”

All of these ACO leaders seem already to be moving forward on a very promising path. And what are the implications of all of this?

One of the biggest, it seems to me, is this: by gathering participating organizations together in larger, composite groups, these leaders are dramatically increasing the chances of making significant advances in curbing costs while improving outcomes. What Lynn Barr told Rajiv Leventhal speaks to one of the core challenges of ACO development: the difficulty of achieving traction with such relatively small covered populations. It seems obvious that we’re going to need greater mass and greater scale in order not only to prove the long-term benefits of ACO development, but also, on a very basic level, to achieve those benefits.

What’s particularly interesting at this moment is the fact of these broader ACO collaboratives emerging at a time when Seema Verma and other senior officials at CMS (the federal Centers for Medicare & Medicaid Services) are intensifying their pressure on provider organizations to take on downside risk in the MSSP program. In so many ways, this feels like an inflection point in ACO development: while no one believes that the phenomenon will simply collapse, not many are fully confident that the MSSP program, in any case, will continue to expand robustly in the near future, either.

And honestly, the concept of a statewide ACO collaborative only makes sense, and seems like the next step in the evolution of ACOs—whether Medicare or private-payer ACOs. And really, a thousand flowers should be allowed to blossom, in this arena.

Indeed, developments are taking place in a number of corners of the industry. Just take a look at the website of the Accountable Care Learning Collaborative (ACLC), a broad collaborative of leaders and organizations already participating in some form of accountable care. The ACLC itself cites a “Community” that encompasses a wide variety of different types of organizations operating in this area, including  The Aspen Group, APG (America’s Physician Groups), the Health Care Payment Learning & Action Network, the Health Care Transformation Task Force, Premier Inc., Integrated Healthcare Associates, and several other large organizations, some of them themselves collaboratives.

So the energy is beginning to emerge to advance the widespread creation of bigger, broader ACO organizations, including statewide ones. And if some of these emerge within the MSSP program, why would they not emerge in private-sector contracts as well? The potential here is great for an acceleration of the entire ACO phenomenon—and it could happen within the next year or two.  So this is a very fertile area in the evolving landscape of value-based care delivery and payment. Only time will tell how this all shakes out; but if Lynn Barr, John Mines, and their colleagues at Caravan Health and FHA are confident about their organizations' near-term path forward, that says something important about where this train is headed. To paraphrase the old Irish adage, may the road rise up to meet all these leaders, and the wind be at their backs.

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