Employee ACOs: Building a Base for Accountable Care

There is no doubt that accountable care organizations are spreading throughout the country and different healthcare markets. In fact, according to David Muhlestein, a Leavitt Partners analyst, there are 428 commercial and Medicare ACOs spanning the country in every state but Delaware.

Even though the model's popularity has sparked a large number of ACOs, many healthcare organizations have yet to take the plunge to accountable care. Some hesitation can be attributed to the fact that ACO structure has yet to be universally defined. "This is uncharted water, and many systems are learning as they go," Eric Parmenter, vice president of employer services for Evolent Health, wrote in a recent whitepaper (pdf), titled "The Future of Hospital Employee Health Benefits."

Even though the ACO waters have yet to be fully mapped, according to Mr. Parmenter, there is a way for hospitals and health systems to experiment with ACO structure and see some of the results of accountable care before committing fully through a payor contract: the employee ACO. An eACO is a self-funded employee benefit plan that mirrors the structure of a traditional ACO.

Unhealthy workers

According to Thomson Reuters data cited in the Evolent Health whitepaper, six common chronic diseases are prevalent in higher rates in hospital workers than workers in other industries. Additionally, healthcare workers face other negative impacts on their health due to their profession. "There are a number of factors that contribute to the poor health of healthcare workers, including…exposure to germs and viruses and high levels of stress," Mr. Parmenter wrote. Overall, the health of healthcare employees could use some improvement.

The health, or lack thereof, of employees directly affects a hospital's bottom line. According to the "SullivanCotter/HighRoads Survey of Employee Benefit Practices in Hospitals and Health Systems," cited in the white paper, the median annual cost of health benefits for a healthcare employee and family is $11,651. The national average is $10,475 annually, meaning there are savings to be had in this area.

eACO model

Because hospital and health system employees are sicker than workers in other industries and their benefits cost more annually on average than others, the employee base is a perfect place to test out the ACO model and try to meet the goals of lowering healthcare costs while improving care quality and patient outcomes.

According to Mr. Parmenter, deploying an eACO prior to launching a full-fledged ACO model has several advantages for hospitals and health systems:

•    Proof-of-concept. If an eACO ends up lowering the cost of care for employees while improving quality and outcomes, it can be assumed that the results will hold in a larger patient base.
•    Population health management scalability. Attempting to manage the health of a large population of patients with no experience in the area is a tough task. An eACO can help a hospital or system scale their capabilities quickly.
•    Better communication. Employees who have received care in an eACO can communicate the care model more effectively to patients. "The employees will have lived the experience and personally benefited from the model, enabling them to become advocates for the same structure in the communities in which they live and work," Mr. Parmenter explained in the whitepaper.

Tips for success

While eACOs can give hospitals and health systems a leg-up in the accountable care game, setting one up does take planning, time and effort, just as launching a regular ACO does. In the whitepaper, Mr. Parmenter laid out some steps for hospitals and systems to take in order to build a thriving eACO, and, possibly, eventually, a successful traditional ACO.

•    Recruit primary care physicians and specialists to the aligned network in order to provide access to all services.
•    Build an integrated, aligned network of facilities and physicians in order to coordinate care.
•    Promote the program to employees in order to grow membership and engagement.

If done well, an eACO can save a hospital or health system money on employee healthcare and improve the health of its employees while providing a model for patient ACO. "In the process [of creating eACOs], these systems will be the pioneers that create a sustainable healthcare delivery model for America, led by an engaged, productive workforce," Mr. Parmenter wrote.

For more information and to view the full whitepaper, click here.

Correction: An earlier version of this article incorrectly named David Muhlestein from Leavitt Partners as Daniel. We regret this error.

More Articles on ACOs:

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