10 Key Concepts on Building an ACO: From Linde Wilson of Aria Health

Linde Finsrud Wilson, COO of Aria Health, a three-hospital system in the Philadelphia area, provides 10 key concepts about Aria's plans to build an accountable care organization.

1. Hospitals need to share ideas.
Aria is part of Premier's ACO Initiative, where Ms. Wilson and her top team can shares ideas about starting ACOs with executives at 16 other hospitals and systems with similar ambitions. Each member of the initiative has different experiences and Aria is one of the smaller members taking part, she says.

2. New need to work with payors. After years of antagonism with payors, hospitals now need to fashion cooperative relationships. A successful ACO requires working closely with insurers to reduce costs and to access their robust patient data, which most hospitals cannot match. Aria is discussing ACO-like projects with a Medicaid entity that it co-owns, a friendly Medicare Advantage plan and its largest private payor, Independence Blue Cross Blue Shield. Within a few weeks, Ms. Wilson expects to sign an agreement with Independence to begin a shared savings pilot project.

3. Need to work closely with physicians. Physicians are integral to an ACO, but most physicians working in Aria hospitals are independent and have to be convinced to undertake the money-saving projects necessary for success. They have to get over bad memories of failed physician-hospital organizations in the 1990s, set up to deal with capitated managed-care contracts back then, Ms. Wilson says.

4. Physicians need incentives. Aria is phasing in incentive payments for physicians who use process-of-care quality measures, starting with cardiologists. These simple arrangements do not require an anti-trust waiver, Ms. Wilson says. To qualify for incentive payments, physicians have to demonstrate increased compliance with process-of-care measures. Eventually, she says, there may be penalties for not complying.

5. Shift to an outpatient mindset. For an ACO to work, hospitals have to stop focusing on admissions and start thinking about outpatient services. "That's a scary thing for a hospital," Ms. Wilson says. the move to outpatient care has been occurring independent of ACOs. Aria has been building up its outpatient presence partly in response to payor pressures. For example, payors have been pressuring hospitals to put some patients on observation status rather than admitting them. Aria's 300-bed flagship hospital has created a 30-bed observation unit, one of the largest in the Philadelphia region.

6. Partnering with competitors. Competing hospitals partner in an ACO. In fact, Ms. Wilson is in talks about jointly running an ACO with another hospital in suburban Bucks County. The two organizations would share complementary expertise. The other hospital was involved in the Medicare care management demonstration project, where it learned to use healthcare workers to make sure certain patients get the care they need, a key strategy for ACOs. In turn, Aria could share its lean management principles, which helped it reduce per-patient costs below competitors without harming quality.

7. Staying clear of the big city. Although Aria is on the edge of Philadelphia, Ms. Wilson does not want to start an ACO there because she believes the city's highly competitive market would be too difficult to organize. However, she acknowledges that any ACO Aria operates would have to develop a relationship with a Philadelphia teaching hospital for quaternary care, which is lacking in Bucks County.

8. Healthcare IT is essential. Ms. Wilson disagrees with arguments that an ACO does not need an electronic medical record. Aria has an EMR system and is subsidizing physicians who piggyback onto it. She thinks healthcare IT positions her health system well for an ACO because so much of ACO management requires patient care metrics and new approaches like the patient-centered medical home require an EMR.

9. Malpractice environment harms ACOs. ACOs' efforts to reduce unnecessary care will run up against physicians ordering unnecessary tests and providing extra care to avoid malpractice lawsuits. Since Pennsylvania lacks tort reform, Philadelphia has become a Mecca for malpractice lawsuits. As a result, Ms. Wilson believes physicians order too many CTs but "I can’t tell them not to," she says. While clinical protocols Aria is setting up can help wean physicians from practicing defensive medicine, even the best clinical protocols, crafted by the physicians themselves, may only put a dent in the problem, she says.

10. A time for older CEOs to retire.
Ms. Wilson has seen an uptick in healthcare CEO retirements and attributes it to the new challenges hospitals face, such as ACOs. With all the changes ahead, she says, older CEOs who were part of a different approach to hospital management perceive this as a good time to bow out.

Read more about Aria Health.

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