7 Steps Hospitals Need to Take to Plan for Successful ACOs

Peter Young, president of HealthCare Strategic Issues in Ft. Myers, Fla., identifies six steps a hospital or system needs to take to be a successful ACO.  

1. Start planning now.
Medicare ACOs start up on Jan. 1, 2012. "That is a very short window to massively transform a hospital’s business model and culture and the same is true for physicians," Mr. Young says. Much spadework needs to be accomplished before an ACO can be launched.  

2. Think like a payor. This means providers will need to know the composition of the ACO membership and adopt tools currently used by the commercial managed care companies. "Essentially, the industry will transition from encounter- and utilization-based reimbursement to care management," Mr. Young says. "The time for providers to think and act like managed care companies is at hand."

3. Revamp contract discussions.
Contract discussions with payors should include methods the provider will use to improve care management, applying best practices and appropriate utilization. "The smart providers will begin to include terminology that reflects a new focus on managed care companies' hot buttons, such as evidence based clinical best practices with an emphasis on coordinated care," Mr. Young says. For example, the hospital might present new measurements on the quality of patient hand-offs and timeliness of diagnostics. "There should be a recognition of appropriate utilization from a payor’s perspective," he says.

4. Decide on provider-partners. To be a successful ACO, the hospital needs to choose independent partners who will be efficient and easy to work with. In addition to physicians, these providers include home health agencies, nursing homes, rehabilitation facilities and other healthcare professionals. In short, "who do you want in and who do you want out?" Mr. Young says.

5. Identify high-risk patients. One of the key missions of the ACO will be to identify higher-risk populations, such as diabetics, and make sure they are compliant. "Providers will need to have a comprehensive understanding of the members in their ACO," Mr. Young says. "They need to recognize patients with the highest chronic health risks for large-dollar care needs."

6. Acquire new software tools.
This means providers will need to use chronic disease management tools like those developed by Humana and United Healthcare. Using these tools, Humana's chronic disease demonstration logged 36 percent fewer hospital admissions and 22 percent fewer ED visits.

7. Brand your ACO. Markets with several hospital systems and a large physicians group will likely have several competing ACOs. To be distinctive, an ACO will have to brand itself. For example, "Community Hospital X embraces the best care, based on clinical evidence and scientific findings." Mr. Young adds: "We need to begin to articulate today what the ACO healthcare means to the prospective members."

Contact Peter Young at peter-young@comcast.net.

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