7 Steps Hospitals Must Take to Embrace ACOs: From Kevin Brennan at Geisinger Health System

Geisinger Health System, an integrated network in Danville, Pa., served as one of the models for the new accountable care organization. The system participated in CMS' seminal Medicare Group Practice Demonstration, a precursor of the ACO, and recently CMS tapped Richard Gilfillan, the head of the Geisinger Health Plan, to run its Innovation Center, which is overseeing ACOs. Here Kevin Brennan, Geisinger's CFO, discusses seven steps hospitals can take to embrace the new era of accountable care.  

1. Establish an integration strategy. The hospital has to decide on an overall coordinated strategy. For example, what will the hospital's relationship with its physicians be? Will it buy practices or collaborate with them? Whatever it chooses to do, "a hospital's role will no longer be just to service a voluntary medical staff," Mr. Brennana says. And what will be the hospital's relationship with private payors? Integrated care will require a more collaboration and a totally revamped payor contract.

2. Understand your culture. Each organization has its own culture that will impact how changes can be implemented. Who is going to resist the changes?  How does the hospital plan to overcome the naysayers?

3. Alter incentive payments. Hospitals will be rewarded in the future for outcomes rather than for sheer quantity. Physician payment plans that were built on work RVUs will have to be include metrics to assess their ability to work with other caregivers, follow quality guidelines and improve efficiency.

4. Transform billing system.
Very few billing systems in hospitals today are capable of handling bundled services, in which one payment is made to the hospital and physicians. "The marketplace is relatively immature here," Mr. Brennan says. "Hospital have just a limited experience with things like bundling."

5. Rethink scheduling. Upcoming payment policies penalizing hospitals for readmissions will require hospitals to have scheduling systems that identify newly discharged patients and make sure someone reaches it to the patient within 48 hours. "Can the hospital connect with community referral sources?" Mr. Brennan says.

6. Measure clinical outcomes. Hospitals not only need to have IT systems in place to measure clinical outcomes and then also be able to use the information. "The government is publishing outcomes on quality and cost," Mr. Brennan says. "Do you have the infrastructure to follow these metrics?"

7. Build cost-accounting infrastructure.
Hospitals will need to know exactly where they are losing money so that they can make the necessary changes. They need to be able to analyze detailed information on costs and revenues by patient, by different types of patients and other measures.

Find out more about Geisinger Health System.

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