Philanthropy's Important Role in the Transition to Accountable Care Organizations

Don't look now, but the face of healthcare in the United States is about to change. The results will be better care, better patient outcomes, lower costs (or slowing of cost increases) and more financially sound providers. It would appear that accountable care organizations are on the minds and in the plans of every healthcare delivery system in the nation. And whether or not Obamacare endures, the self-evident logic behind the ACO model is undeniable, because at their core, ACOs foster clinical excellence and better patient outcomes while controlling costs.

However, the effort required to develop an ACO isn't for the faint of heart, and neither is the financial commitment. The role of philanthropy in the transition to the ACO model will be important for the 58 percent of the nation's hospitals that are non-profit and the 21 percent that are owned by local government. The role of philanthropy in supporting ACOs is increasingly clear, and the argument for philanthropists to direct their social investments in this direction is compelling.

The greatest challenge to this new era in U.S. healthcare will be the transition from what is charitably called our current healthcare "system," to the mindset, technology, rigor and accountability that will soon dominate the landscape. According to the CMS, an ACO will be "an organization of healthcare providers that agrees to be accountable for the quality, cost and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it." ACOs are also increasingly contracting with private payors, allowing these models to extend beyond the Medicare population.

The forthcoming transition will require significant investment on what Thomas Cassels, executive director for the Health Care Advisory Board, calls the long ACO "transition path." The four pathways along this path include: 1) hospital and physician integration, 2) building information-powered health systems, 3) clinical transformation and 4) payment transformation. In each of these four steps, philanthropy can play a role in moving non-profit and government-owned systems forward in their efforts toward full ACO development.

Hospital and physician integration
ACOs call for creating a group of coordinated healthcare providers with a sufficient base of primary care practitioners. These professionals will be collectively accountable for quality and total per capita costs across the full continuum of care for a patient population. An ACO may include doctors of medicine or osteopathy, physician assistants, nurse practitioners, clinical nurse specialists in group practice arrangements, networks of individual practices of ACO professionals, partnerships or joint ventures between hospitals and ACO professionals, and hospitals employing ACO professionals.

An overarching challenge here is securing a sufficient number of primary care physicians and practitioners that reflects population need, particularly in small communities and inner city neighborhoods with limited primary care resources.

Philanthropy can help by funding incentives to attract and retain primary care clinicians in underserved communities. These incentives can include forgiveness of medical school debt, signing bonuses, housing stipends and funds for special interest research. With research clearly showing a good work environment is the single greatest incentive in recruiting and retaining physicians, philanthropic dollars can be well invested to upgrade facilities, purchase high value equipment and support special physician-led community projects.

Building information-powered health systems
ACOs are required to define processes that promote evidence-based medicine and patient engagement strategies. This patient-centered strategy relies on evolving and emerging technologies including telehealth, remote patient monitoring and electronic health record systems that link private practitioners and hospitals — all of which can be used to manage patient care. While these strategies require costly technologies and staff training, they will help the ACO fulfill requirements to evaluate and address the health and related needs of their patient populations.

Philanthropy is increasingly helping to purchase advanced technologies and equipment for hospitals and community health initiatives. As the justification for non-profit status comes under greater scrutiny, the use of philanthropic dollars can emphasize the community service being done by the ACO-anchoring hospital and how they are helping ACOs achieve higher quality and lower cost healthcare.

Clinical transformation
ACOs must define processes to promote evidence-based medicine, patient engagement, monitor and evaluate quality and cost measures, meet patient-centeredness criteria and provide coordination across the care continuum. Over time, it is expected more reliable and more sophisticated performance measures will be used to support improvements and demonstrate how cost savings are being achieved through improved healthcare delivery. Simultaneously, new federal healthcare reform legislation has empowered the Institute of Medicine to seek evidence-based clinical practice guidelines from all areas of clinical medicine. These guidelines will be posted on a fully accessible website with the expectation that clinicians will adopt and follow them.

Philanthropy is now being used to fund the creation of evidence-based clinical practice guidelines by many professional medical organizations and associations. The typical cost to create a single guideline, following a strict three-tier process, is between $80,000 and $100,000. As evidence-based medicine evolves, there will also be a much greater need for clinical training on using new standards of care and procedures.

Payment transformation
ACOs may use a range of payment models including capitation and fee-for-service with self-designed strategies for sharing generated savings. Through this approach, payment is based on the ACO's accountability to patients and third-party payors for the quality, appropriateness and efficiency of healthcare services. Payments linked to quality improvements should also reduce overall healthcare costs, creating a value-based marketplace and standard of care.
Here, philanthropy can play a valuable role, as it has for decades, in helping improve the quality of care by elevating the care-giving physical environment, securing needed equipment for diagnosing and treating patients and helping clinicians remain current in their field. 

The push to adopt the ACO model comes at a time when hospitals and integrated healthcare systems are experiencing their thinnest margins in memory. The American Hospital Association has estimated ACO formation will incur high startup costs and large annual expenses to maintain the system. Now, more than ever, the non-profit sector of the healthcare industry must look to philanthropic dollars to help adopt this new era in healthcare.

From a donor's perspective, an investment in the success of the local ACO can result in multi-dimensional benefits, an annuitizing effect on their contributed funds and the taming of spiraling healthcare costs.  And, as importantly, it is a gift that keeps on giving by contributing to improved quality of care, as well as a healthier and wealthier community.

Larry G. Raff, MPH, is president and principal of Copley Raff, Inc., a leading philanthropy consulting firm based near Boston. He brings three decades of leadership and experience to healthcare organizations seeking advancement results. His clients include four of New England's largest multi-hospital systems, the largest multi-hospital system in the mid-west, numerous academic medical centers and community health centers. He also provides counsel to national organizations including the American Optometric Association and the Massachusetts Medical Society.

More Articles on ACOs:

Advancing Accountable Care: 5 Hospital ACO Leaders Share Insight
CMS Names 89 New Medicare ACOs
9 Recently Formed Commercial ACOs

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