In Washington, Aetna’s Kennedy Offers One Vision of an Accountable Care Future

Oct. 12, 2014
Charles Kennedy, M.D., CEO of Aetna Accountable Care Solutions, offers his vision of private insurer-sponsored accountable care at the Health IT Summit in Washington, D.C.

Charles Kennedy, M.D., CEO of the Accountable Care Solutions division of the Hartford, Conn.-based Aetna, on Oct. 8, delivered a keynote presentation entitled “Building a Sustainable ACO: Strategies for Success,” as part of the Health IT Summit in Washington, D.C., and held at the Westin Arlington Gateway, in the Washington suburb of Arlington, Va. Laying out his vision of the future of accountable care, Dr. Kennedy spoke of collaborations with specific integrated delivery systems in specific markets as being at the core of Aetna’s overall strategy around the development of accountable care organizations (ACOs) nationwide.

“We try to forge collaborations,” Kennedy emphasized in his keynote address. “And the idea is that the payer has a certain set of expertise, and the payer has a certain set of expertise. And if we can come together, we should be able to reduce the risk associated with the transition from volume to value, for providers. But that is no small task: if you think of a health plan’s role, how does the provider see us? Denied claims, pre-authorization hassles, denials for not using prescribed processes… but moving towards value, the incentives become aligned. If you give folks the right incentives, they’ll cost less,” he emphasized. Kennedy conceded that inevitably, efficiency improvements will lead to “creating slack in your delivery system; there are going to be fewer days per 1,000, and shorter lengths of stay.”

Charles Kennedy, M.D.

The key, Kennedy said, will be that when Aetna partners with a provider organization, it will help that provider organization to deploy data analytics and population health strategies and solutions that will help to close the revenue gap created by efficiency improvement, and it will work intensively with that provider to help provider leaders merge clinical and claims data in order to improve clinical and financial outcomes. “The real differentiator of what we do versus what a lot of technology vendors do,” he said, “is that we’re driving a specific value of the overlying price. When our actuaries do the analysis and say if we were able to deliver a product, the cost would be $350 PMPM [per member per month]. But if you were able to implement an HIE [health information exchange] [and get your physicians to use it, especially in the ED, and you participated with us in studies of avoidable ED visits, for instance, and collaborated with us in disease management programs, we could help bring the per member per month costs down considerably and make disease management programs effective.” Given all those supports, he said, “A health plan can go from $350 PMPM to $310 PMPM, and that $40 PMPM can help offset losses from reduced utilization” incurred by the provider.

As the Aetna Accountable Care Solutions website notes, all of this is part of an overall corporate strategy. Indeed, the “Our Purpose” section of the organization’s website says the following: “Healthcare is ready for a major transformation. At Accountable Care Solutions from Aetna, we are reinventing healthcare by collaborating with providers to radically improve population health, financial sustainability and consumer engagement. We believe that with payers, providers and patients on the same team, significant, positive change is possible. We work to empower your provider organization to realize your unique vision of improving clinical outcomes, moving toward value-based care and gaining market share,” the statement of purpose adds, before listing a range of facilitative collaboration possible between Aetna Accountable Care Solutions and provider organizations.

In particular, Kennedy cited the collaboration with the Falls Church, Va.-based, five-hospital Inova Health System as a key example of Aetna’s success in collaborating with integrated delivery systems nationwide. “Here in the DC area, Inova is the dominant delivery system in the area, with north of 60 percent market share, and Aetna and Inova developed a shared savings program,” he noted.

“We launched Innovation Health Plan, built from the ground up. It has products sold on the public and private exchanges. And they’re price-leading products. It was successful in that, within the first year of operations, we grew up 140,000—that’s outstanding growth. And virus the Blues plan, we sold one to one in this geography, and were profitable in our first year of operations. Why was it successful? A lot of it began with the commitment from both organizations to collaboration and to data-sharing; but also, we created shared financial incentives.”

In short, Kennedy noted, Aetna has a conscious strategy of choosing one major integrated health system in a particular market with whom to partner, and then creates a full-fledged partnership with that provider, to the exclusion of all other major providers in the market. Here’s how he framed that scenario:  “You have the opportunity to transition from a volume-based, to a value-based, healthcare system. When we’ve worked with an ACO and helped a delivery system launch an ACO, it’s been very successful. We’ve been able to drive large amounts of patient volume to our partner. What happens with the competitors in that market?” he asked. In response to the success of the Aetna partnership with their competitor, the other provider organizations in a particular market tend to see a panicked reaction, he noted. “You see more tests, higher utilization; they become more inefficient” over time, in reaction to the Aetna-single-provider ACO’s success. “So why should you do this? If you don’t do this, and you end up being that inefficient delivery system, I don’t know if you’ll be in business in five or ten years,” he said. “So this notion of transformation is vital. And, that’s why we’ve been focused on offering transformational types of strategy” nationwide.

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