What do ACOs need to succeed? Q&A with Medullan's Dutch Dwight on making accountable care feasible

Based on the buzz around value-based care, it may be easy to forget much of the industry still relies on traditional, fee-for-service payments. The transition to value-based care — which encompasses bundled payments, accountable care organizations and other models of care delivery and finance — is a slow one.

In fact, a survey conducted by the American Medical Group Association found medical groups expect fee-for-service to decline 24 percent in the next two years, but major barriers still impede providers' transition. Survey respondents cited a lack of access or transparency in data sets, ineffective attribution and issues with benchmarking and risk adjustment methodologies as areas of major concern.

We checked in with Dutch Dwight, the vice president of business development for Medullan, a Cambridge, Mass.-based digital health innovation firm, to discuss what changes the healthcare industry needs to make, particularly to make the ACO model viable. Mr. Dwight has worked with both payers and providers to evaluate the potential of adopting new business models, tools and processes to help engage consumers. Medullan works with ACOs and their partners to help improve the cost of care delivery and reduce costs within the alternative model of care.

Editor's note: Responses have been edited lightly for length and style.

Question: From your perspective, is the Pioneer ACO model viable?

Dutch Dwight: I think it's still to be determined. CMS has yet to figure out the model that is driving half the payment structure. Those that have dropped out [did so] because the return is insufficient, or the population that they are serving is primarily Medicaid or insured with plans on the Affordable Care Act marketplace.

On the provider side, they cannot afford the costs of setting up the entity. The cost of the human capital and the information technology is too high to perform the needed data analysis. I don't think hospital administrators are yet in the position to effectively perform analysis on groups of patients and effectively understand the revenue they can get out of them.

The EHR may or may not be customized to enable accurate accounting of the payer contract. So if I say I am going to dive into a particular population or cohort and I don't know the risk profile, I will lose my shirt if I put them into an ACO contract. A lot of EHRs are yet to be fully understood or fully modified to handle alternative payment models.

Q: How can leaders help promote cultural change among providers in ACOs?

DD: There are large cultural aspects that are inhibiting change in the provider community. The cultural change is that you have to align services in the hospital with external care management services to manage the cost of the population down, and that may be difficult to do. Imagine collaboratively defining the following: a payer Healthcare Effectiveness Data and Information Set measure definition, a hospital HEDIS measure definition and a specialty doctor practice HEDIS measure definition. Imagine aligning these as qualitative measures in the same language. This could take years. Presently, CMS says each party has to measure and report HEDIS and cost measures.

The biggest cultural change hospitals may need to adopt is a payer care management solution. That will allow for ACOs to lower the cost of care delivery and allow for greater alignment. Each entity could end up measuring the same patient on overlapping systems. It is hard enough to reconcile the payment, now add the qualitative measures.

Q: What kind of technology is needed to make Pioneer ACOs effective?

DD: In the late 90s going into the early 2000s, corporations adopted technology such as enterprise resource planning software, and then they began to adopt optimization tools to improve the visibility of stock or supply chain inventory within that. Today we have implementation of EHRs, which is just barely completed. It will take another 2 to 3 years before they can begin to adopt optimization tools to better manage populations and deliver services to those populations to lower the cost of care. There's a corollary between the implementation of technology in the late 90s and today. The optimization tools need to have visibility into the services across the care continuum. Internet of Things cloud-based tools are beginning to come online. These tools provide visibility to the product and or service(s) being traded, provided or delivered in real time. Integration is key. We tackled it in the ERP world, we can tackle it here.

Q: How can hospitals better meet the changing needs of today's patient?

DD: The key is aligning the hospital contracts, Medicare, Medicaid and private payer contracts to a population health orientation. [Hospitals] have to have better care management tools for populations that are more aligned to payment. There will be a balance between the fee-for-service model, while incorporating the best of value-based contracts.  

Hospitals need to integrate people, processes and technology, and align the internal culture with adequate technology and improved processes to be able to meet the patient at the point of need.

Q: How can ACOs better engage consumers in managing their own care?

DD: Technology is going to disrupt the business model until [providers] align with consumers, because the consumer is going to want care where they want it, when they want it. The concept of getting care will change and evolve to be more remote. Hospitals will be disrupted because cost of acquiring and maintaining capital assets is too high. The ACO will need to figure out better payment and monitoring solutions to engage with IoT technology, where consumers can provide their information in a proactive manner, one in which the hospital system can bill for the transaction while recording the qualitative measures.


More articles on accountable care:

Dartmouth-Hitchcock exits Pioneer ACO program: 10 things to know
Brookings Institute's Mark McClellan on ACOs: 'We're at the end of the beginning'
Rush, Aetna roll out new ACO: Whole Health Chicago

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