Hey Doc! This ACO’s for YOU!

Creating Integrated Delivery Systems

As the new regulatory and economic healthcare landscape continues to evolve, professionals at the ground level are assuming different positions.  Some are taking a “wait and see” attitude. 

Others, generally led by physicians who are reading the demographic Writing on the Wall – aging boomers with similarly retiring doctors (and nurses) – are taking steps to do more with less.

Providers alone are not regarded as innovators.  But when they team up to form Integrated Delivery Systems (IDS’s), they assume a leadership role and are looked to as authorities and trendsetters – think Geisinger and the Mayo Clinic.    
In the September 7, 2010 issue, we outlined the first steps towards forming Integrated Accountable Care Organizations (ACO)-  http://healthcarereformmagazine.com/article/building-fully-integrated-aco-s-nuts-bolts.html.  Initial steps included Workgroup formation led by a third party neutral agency, Initial Healthcare Information Technology (HIT)/Data Evaluation and Design, Reimbursement and Incentive Alignment, as well as Funding Options. 

Now we continue to outline steps to building an Integrated Delivery System, still under the ACO umbrella.

Partial physician ownership of these ACO operations, if structured properly using HIT and non-MD/DO services, can be a way doctors can supplement diminishing Medicare reimbursements in other areas. 

Integrated Delivery Systems – Benefits for Providers

Providers historically have created IDS’s out of a desire to create a system of better care.  It has been a complicated, politically charged task and the rewards were vague.  ACO’s present a new opportunity to get rewarded for developing better care by the 800 pound gorilla in the room – Medicare. 

Physician leaders can also use the integrated structure to build Medical Teams, staff-model HMO’s, or develop other arrangements that can lead to increased flexibility, a bigger market share, as well as new contracting arrangements with other providers, payers, and patient groups. 

Whether reimbursement is via ACO Shared Savings or dividing up Global Capitation, physicians can structure ACO’s to profit while gaining efficiencies along with increased safety, quality, and efficiency for the customer.  And by using HIT, ACO’s can more easily meet CMS benchmarks to gain reimbursement and increase profit margins.

For example, the DRGs with the most frequent readmissions are Chronic Heart Failure, Psychosis, Vascular and Cardiac Surgery, and COPD.   CMS found that more than 50% of patients readmitted within 30 days appeared not to have had an outpatient or home health visit between hospital discharge and readmissions.  In an uncoordinated (non) system, the hospital was finished with its job.  

In an IDS with a well designed HIT system, however, immediate Home Health Care follow-up visits could be built into the connected ACO systems’ care paths for these diagnoses to ensure appropriate medication, outpatient care, and necessary home care adjustments.  Care paths for the IDS can be structured and standardized on the HIT system, complete with alerts and next steps.

BOTTOM LINE: Such coordination can prevent readmission penalties for hospitals as well as increase margins for physician-owners in a globally Capitated system.  This will be increasingly important as Medicare moves towards reimbursement for entire Episodes of Care.

Providers of Integrated Delivery, including physician-owned Medicare Advantage plans will be able to increase Market Share by grouping together and showing that they use IT to provide tighter integration with each other and the patient. 

Integrated Delivery Systems – Benefits for Patients

Currently, patients do not understand the benefits of Full Integration – the increased odds of success when a coordinated team is behind them, resulting in safer care, better outcomes with fewer treatment complications.

Integrated Delivery Systems can achieve greater market share by marketing these benefits of more complete and safer care. Advertising and outreach can educate the patient on that level.

But it would probably be more effective to reach consumers by trumpeting the convenience of One Stop Shopping for medical information about their well being.  People love to obsess about themselves and the ACO presents an opportunity to display diagnosis, treatment, drug, and lab information as well as lifestyle recommendations and coaching/communication in one place. 

Very few patients have the ability to access their medical information, the exceptions being Kaiser Permanente members, who can take advantage of the fully integrated HealthConnect IT system.  A physician-owned ACO or Medicare Advantage Plan can use HIT to create such full integration in a way that third party payers cannot.

Meeting Regulatory Changes

A Hospital CEO recently noted that the Feds and State Governments call the song and everyone dances. 

There will be Federal Trade Commission changes to Stark laws. Further developments are expected from CMS and will be interpreted at the local level.  What is known now is that there will be increased flexibility to develop joint venture arrangements based on delivering higher value care. 

Individual state governments will regulate specifications within the broader regulations.  Several State governments have already indicated that they will require Knox-Keene licensure from ACO’s. 

Implementing ACO’s and/or IDS HIT with Current Business

As we outlined last fall, forming and ACO will be easiest with a third party Agency to organize, design governance, as well as guide onsite implementation and change management.   

This third party may be a Managed Care Organization affiliated with physicians, part of a hospital foundation, or its own entity, depending on the regional distribution of power and resources. 

But regardless, the neutral third party will be legally necessary in order to manage and distribute the shared savings or global capitation among the providers after coordinating the design and implementation of the ACO.

Health providers have widely varying integration and HIT levels.  A complete plan for creating a successful Integrated Delivery System will start with an environmental assessment, including current community involvement and standards, public Information Technology, existing legal coordination via contracts, as well as a thorough needs assessment as to the technological, legal, labor, and administrative resources that would be needed along with timing. 

The Agency can then form a schedule where the governance of physician, hospital, subacute, and community leaders can meet to determine needs, resources, and actions on a regular basis, moving the project forward. The Agency can run the necessary change management with minimal disruption of daily business.  

The result will be better care, more market power, and increased revenue development flexibility.   

Coming soon: Increasing provider strength by creating using HIT to create ACO/IDS Networks.

About The Author

Health Economist Jennifer Zaft (jazaft@gmail.com) understands the dysfunction of the current industry and the promise behind the Affordable Care Act.  Currently she is Principal and Founder of The JAZ Group, LLC, a design, management, and HIT consulting company that builds and assists teams of physicians and other providers so they can best meet current and upcoming challenges.  Her consulting group includes experts who have successfully started or added to healthcare businesses using Care Pathway Data, Hospital and Physician Liaisons, Finance, HIT, Change Management, as well as Program/Product Development.