High-value primary care providers are the secret to ACO success

If you are looking for a consensus on the success or failure of Medicare’s Accountable Care Organization experiment, you are not likely to find it. That’s because while most ACOs have improved the quality of care, few have been able to cut costs enough to earn meaningful financial rewards under the program. They have achieved only half of the goal of creating greater value.

So why are so many ACOs failing to meet the cost component of value? After all, better outcomes should translate into lower costs.

There is a blog post by Les Funtleyder, managing director of healthcare financial services company Poliwogg, from 2013, the beginning of the ACO experiment, which outlined four problems healthcare providers needed to fix to avoid failure. The blog was titled “The ACO Failure Hypotheses: Likely But Not Inevitable,” which sums up the general feeling three years ago that ACOs faced an iffy future, at best.

Those challenges included infrastructure (misallocated resources, leading to inefficiencies); slow adoption of technology; a provider culture habituated on fee-for-service payment and a patient culture accustomed to being passive consumers of healthcare; and inertia (the systems’ problems have been around for a long time and will be difficult to overcome). Perhaps the biggest hurdles are the cultural challenges; human beings are creatures of habit, and even with the best of intentions, we tend to fall back on what we are used to doing, especially when we are in a hurry. And how many physicians have you met lately who have extra time on their hands?

Despite the pessimism, most ACOs have improved quality scores, but just some have cut costs enough to earn a reward. Various industry experts have postulated several reasons for the uneven results, though most have pinned at least part of the blame on the lack of a free flow of data across the system.

But hospitals and health systems knew upfront they had siloed data and that the exchange of data would not be easy. My guess would be some ACOs underestimated the importance of data flow while others — the ones seeing the financial reward — took it far more seriously and put more effort and resources into breaking down the barriers.

Another technology related issue is telehealth. Despite growing proof that using telehealth can improve outcomes and lower costs, only about 26 percent of ACOs use it, according to a 2016 survey by Premier. As Mr. Funtleyder's blog post predicted, slow adoption of technology is a barrier for many ACOs. But again, that’s only part of the problem. If you review the literature, there are dozens of reasons offered for the poor financial results of most ACOs.

So there is no simple answer to the question, “Why are ACOs failing to cut costs?” But maybe we could understand the problem better by asking a different question: Why are some ACOs succeeding?

To understand the failures, look more closely at the successes
To answer this question, you might look at a study on high-value providers done by the PetersonCenter on Healthcare and StanfordUniversity’s ClinicalExcellenceResearchCenter.  The researchers defined “high value” as providing exceptional quality of care at lower-than-average total cost. Since that is the goal ACOs are trying to achieve, studying these providers might be useful.

The researchers examined about 15,000 primary care sites and identified 11 practices that were at the top in quality (based on HEDIS data) and also among the lowest-cost providers, based on annual total health expenditures per capita, including payments for patients’ drugs, emergency room visits, lab testing and other services. The researchers used commercial insurance claims data to identify low-cost providers because this gave them the full picture of costs for each patient. Since ACOs are expanding beyond Medicare into commercial insurance contracts, this study should be particularly valuable in guiding ACOs to better financial success.

The researchers found the high-value practices differed from the average practice in three important ways:

  • Their patient relationships were deeper
  • Their interactions with the healthcare system were wider
  • Their practice organization was team-based

In all, they identified 10 specific characteristics/behaviors which can be replicated by other practices. These characteristics had more to do with attitude and culture than with technology or big investments, though smart use of technology did play a part. In particular, all the practices had the capability to access patient records remotely, which allows the physicians to respond to after-hours patient needs. But they are all cautious about investing in equipment and technology, spending only on technology that can help them provide better quality care at a lower cost. They purchased no expensive imaging or lab equipment unless they could share the investment with other providers and spread the costs over a sufficiently large patient population.

One characteristic that stood out was a habit of following up tenaciously to ensure that actions that are supposed to happen actually happen. This follow up includes extensive communication with providers outside of the practice. If a patient goes to a skilled nursing facility, for example, these practices spend the time to ensure that the other facility has all the information needed and that they understand as much as possible about the patient’s condition and needs. That is especially notable considering many ACOs struggled with integration of data from long-term care facilities and other out-of-network providers.  These practices don’t passively wait for the data to flow, they seek it out.

These practices also close the loop with patients. They make sure patients go to their specialist appointments, they use claims data from pharmacies to track medication adherence, and they follow up immediately if a patient is admitted to a hospital.

They are also proactive about gathering feedback. They don’t just respond to complaints, they solicit them. They consider complaints to be valuable information they can use to make their practices better.

These practices also make very smart use of physician time. All members of the medical team (including physician assistants, advanced practice nurses and medical assistants) practice to the full extent of their licenses. Tasks that don’t require a physician are given to other team members, allowing physicians to spend more time on direct patient interaction and the diagnostic and treatment decisions that only a physician can make.

Interestingly, though these practices provide more intensive patient care and engagement, including more patient access outside of normal business hours, the study found the physicians enjoy a higher quality of life than is common in primary care.

How ACOs can succeed
These high-value practices are, on their own, accountable care organizations. Their methods ensure the rest of the healthcare system is accountable to them and to their patients. So if you want a model on which to build ACOs, these practices would be a good place to start.

If I were building an ACO for a hospital or health system, I would identify the high-value practices in my physician network and work closely with them to replicate the conditions identified in the Peterson/Stanford study. Then I’d ask these practices to mentor their peers, to help them become high-value providers. In the final analysis, it is the primary care providers who have the greatest influence over the value of the system.

CMS has finally begun to acknowledge this reality, increasing reimbursement for the intellectual input of primary care physicians. They are finally going to pay for the medical management and patient engagement work that is crucial to improving outcomes and reducing costs. That’s good news for everyone who pays for the healthcare system, which includes pretty much everyone in the U.S.  The losers in this new trend will be specialist providers (including hospitals), who will see cuts in their reimbursement as Medicare moves more money into primary care. This trend may create an incentive for more medical school graduates to choose primary care practice over specialty care, which would be a positive development. The U.S. health system is currently oversupplied with specialists and undersupplied with primary care physicians.

The hardest part of making ACOs financially viable will be changing the habits of primary care practices that are not high-value providers. This is a monumental task. To convince these providers to change the way they do business, you’ll have to show them convincing evidence that the changes will be good for them and their patients. You’ll also have to provide the support and infrastructure to make the change easier. That includes a comprehensive strategy for data sharing across all providers in your system, because a free flow of information will remove one of the big barriers to providing high-value care.

It’s a lot of work, but you don’t really have a choice in whether you engage in the task. Risk and outcomes-based reimbursement models aren’t going away and will soon become the norm. If you aren’t working with high-value primary care providers, you face financial catastrophe. If you want your ACO to succeed, you need these providers on your side, and you need to help all the others become high-value providers. 

More articles on ACOs:

Could ACOs inadvertently be making healthcare disparities worse?
Non-ACO hospitals outperform ACOs in some value-based initiatives
HHS' Sylvia Burwell: This Iowa town should be the role model for US healthcare


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