1. Join a Medicare Advantage plan. Medicare Advantage plans, which the Obama administration was considering phasing out, are a useful step toward creating an ACO. Medicare Advantage plans pay a set fee per member, per month, to oversee a patient’s care, but much of the oversight is still done by the plan. “Use a Medicare Advantage plan as the learning process,” Mr. Young says. “If you’re not ready today to contract with a Medicare Advantage plan, focusing on elements of quality improvement and measurable evidence-based medical criteria, you are certainly not ready for an ACO.”
2. Contract with private payors. Large insurance companies such as UnitedHealthcare and Humana are actively seeking providers to work with. Mr. Young says these payors are willing to work with all sorts of providers. “Humana has said they are willing to work with providers at whatever level they are in performance improvement including through to capitation,” he says. “Payors are willing to work with providers on driving evidence-based medicine, beginning with chronic disease patients under a physician’s care.”
One reason to work with payors is that they have more sophisticated patient data than hospitals generally have. “The payor has an incredible amount of information to help the hospital as the provider,” he says. “Insurers are building networks among the hospitals and practices with the best outcomes.”
3. Organize hospital-employed physicians. “I read a vast number of hospital bond disclosures on physician practices and in nearly all the column entries are red ink, operations,” Mr. Young says. “Near-term ROI is not there, but with cost reductions and overall performance improvement and IT gains, margin can be improved.” The key to success, he says, is finding a high-powered, innovative practice manager who understands how practices work. “Physicians will need a faster response cycle than hospitals are familiar with,” Mr. Young says. “One of the major complaints physicians have regarding hospitals is it takes so long for the hospital to make a decision if they ever do.
4. Improve hospital IT systems. “Let’s not fool ourselves,” Mr. Young says. “You can’t have an ACO without up-to-date IT. But most hospitals lack the level of sophisticated IT an ACO requires. “Having IT ready for ACOs is a longer-range objective for most hospitals,” he says. “However, Medicare Advantage plans have basic tools to assist providers.”
5. Link up with ancillary services. The logical ancillary services to consider are directly related to employed and aligned physicians: outpatient diagnostics, imaging, surgery centers and oncology. The easiest functions for a hospital to integrate are cost-efficient, evidence-based services that produce high-quality outcomes. “That is exactly what large payers are looking for from providers,” Mr. Young says.
6. The 1990s HMO reaction won’t repeat. As payors create networks focused on the most efficient, high-quality providers, they will begin to look more like HMOs, which restrict access to providers. But “this is not like the old HMO days of the 1990s,” Mr. Young says. “Patients are now very familiar with networks.” Also, payors won’t be as aggressive as they were back in the 1990s because healthcare reform has limited some of their most unpopular practices, such as restricting coverage for people with preexisting conditions. Also, payors have a strong grounding in evidence-based medicine.
Contact Peter Young at peter-young@comcast.net .
Related Articles on ACOs:
As Interest in ACOs Wanes, It’s Time to Do the ‘Next Right Thing’
Essential Primer: Pioneer ACOs and Proposed Advance Payment Initiative
7 Steps Hospitals Need to Take to Plan for Successful ACOs
