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Minneapolis' Fairview Health to Transform Much of Its Private Pay to Shared Savings Models

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Fairview Health Services is way ahead of many other participants in Premier's new Accountable Care Collaborative. The seven-hospital Minneapolis system, with 500 employed physicians, is two years into a shared savings arrangement with Medica, the Minnesota-based health insurer.

Next year, Fairview is poised to start similar arrangements with its other key insurers. By the time Medicare ACOs start on Jan. 1 2012, Fairview will already have transformed much of its private pay to the ACO "shared savings" payment model, which rewards physicians and hospitals for savings.

But David Moen, MD, executive medical director of innovation and network development at Fairview, thinks there is still much more to learn from other hospitals in the Premier collaborative — even from the ones just starting out. "It makes sense to pay attention to people behind you because they may come up with a better way of doing things than you did," he says.

The Minnesota model
Dr. Moen takes exception to criticisms that it is somehow easier for Minnesota providers, who played a strong role in the 1990s HMO movement, to adapt to the new payment models. He says HMO contracts dried up in Minnesota, as in much of the rest of the country. Still, hospital executives in other states seem to believe Minnesota healthcare has an advantage in the brave new world of ACOs.

"A lot of people say, well, it’s easy for you in Minnesota," he says. "You're some kind of socialists up there, or you don’t have a lot of uncompensated care." In point of fact, Minnesota has an outspoken Republican governor, Tim Pawlenty, and is wrestling with a great many health disparities and a serious a state budget crisis.

"It gets me mad when I hear this kind of stuff," he says. "You can pretend to yourself that it was easier for us, but it's hasn't been. We've had to go through a lot to get where we are now."

Strong alliance with insurer
Fairview did, however, get a big boost from Medica, which insures 1.4 million members, one-fifth of whom use Fairview. In an unusual arrangement to help Fairview come up with a new care delivery model, Medica is giving Fairview millions of dollars in funding as well as its rich database on members.

But even with all the good will between payor and provider, "it takes time to build trust," Dr. Moen acknowledges. Both sides "had to agree to a shared vision and shared purpose and have an honest dialog," he says.

In other markets, health systems use their market power to leverage higher prices, "but we knew that was not sustainable," Dr. Moen says. "Instead, we used our market power to drive change."

How the model works
Under shared savings, Fairview physicians look for ways to reduce costs by better coordinating care. For example, the system has been changing the clinic care team structure and creating new ways to interact, such as e-visits, nurse-only visits and group appointments.

While the shared savings approach is still based on still fee-for-service payments, it adds a per-member, per-month payment to cover quality, cost and patient experience. Evaluating quality involves measuring outcomes and some processes for diabetes, hypertension and other chronic conditions. Cost is a measurement of the total cost of the service compared to that of the market, plus a risk-adjustment.

Getting started wasn't easy
Getting the shared savings system up and running was not easy, Dr. Moen says. Fairview had to hire more people and spend more money for IT, project management and change management. The system depends on a data exchange that gives feedback to physicians, but it was difficult to get the data exchange working fast, so that physicians could redirect care if necessary. "We have adjusted it but it's still too slow," Dr. Moen says. "It's hard to get the data to physicians in a timely manner."

The new model began with primary care physicians and then included specialists and hospitals. In addition to Fairview's 500 employed physicians, some 1,400 independent physicians were recruited and educated about the new payment model. This was a success. "Physicians have listened to us," Dr. Moen says. "We're gotten them to understand it's not a fee-for-service 'generate activity' model anymore." But he wishes specialists could have been added to the mix earlier.

Including Fairview's hospitals was not easy, Dr. Moen says. "You need to bring the hospitals in because a lot of the costs are tied up in the hospitals," he says. "But bringing them in is tricky because you're tinkering with the revenue machine for the organization."

First signs of success
According to an analysis of Medica claims data, Fairview has demonstrated the ability to more effectively manage the total cost of care for Medica enrollees. "Our leading indicators show that we are bending the cost curve," Dr. Moen says. "But it's still too early to say it's successful. It's going to take a few years to see the results."

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