By Cathy Cather

April, 2011 – One of the goals of health reform is to improve the nation’s health care system by providing higher quality health care for more individuals at a lower cost.  Accountable Care Organizations (ACO) may play a leading role in achieving this goal.  On March 31, 2011, HHS issued proposed regulations establishing the “Medicare Shared Savings Program” which “promotes accountability for a patient population and coordinates items and services under Medicare Parts A and B”.  The program encourages “investment in infrastructure and redesigned processes for high quality and efficient service delivery.”

Some say that the ACO will encourage hospitals, multi-specialty groups, and IPAs to achieve the desired performance of fully integrated health systems like Mayo, Cleveland Clinic, Intermountain, and Geisinger.  But those institutions, although held up as models, also suffer from care coordination and IT challenges and are not without their own waste and inefficiencies.  How other organizations will fare in an at-risk model without their level of integration is a question that carries considerable uncertainty.

The ACO rules have not been finalized.  There is a 60-day comment period before a final rule will be issued. Until the final rule, appropriate measures to assess the quality of care, or how outcomes will be measured and rewarded, remain unknown.  The complexity of the variables and lack of credible data to link activities and outcomes make the rule-making process difficult and slow going.

Although ACOs will be for Medicare patients only, applicability to younger patients is on the minds of executives faced with investment and organizational decisions.  Most interesting to see may be how consistent government metrics match up with market-based solutions available to employers in the marketplace.  The complexity of serving many self insured employers, each with multiple plan designs, disease management, care management, and wellness initiatives, as well as serving multiple TPAs and carriers, requires significantly more administrative sophistication than only serving Medicare patients.

And, the expectation that educating patients will have a significant impact on outcomes is an untested theory.  Well-documented noncompliance with written prescriptions is a reasonable indicator of likely challenges.  Building a trusting relationship with patients is a critical component but difficult without understanding what they are up against with a disease and their job, family, coverage limitations, health literacy, and other barriers to care.  Understanding the context in which the ill person operates will also drive outcomes.

Deciding How to Participate in the ACO Opportunity

For hospitals, it’s not a question of whether to create an ACO but how.  Understanding the complexity of this endeavor, leadership must decide which of the following components it has the core competency to create.

  • Executive:  Defining a strong set of core principles that all stakeholders understand and respect, building strong teams and defining and nurturing a shared culture, understanding and developing processes to manage conflicting stakeholder objectives, recruiting key leaders, and deciding what to do/build themselves and what to buy.
  • Contractual:  Execute favorable contracts with health plans and employers as well as suppliers and providers for optimal financial performance while assuring regulatory compliance and minimizing risk.
  • Physician Relations: Balance need for specific provider and supplier participation and need for improved performance as well as reinforce value of changes. Deliver data (see operational, below), tie it clearly to contractual gain-share opportunity, and use it to influence provider behavior on a population basis.
  • Operational: Collect necessary data, interpret it, report it to stakeholders with clear understanding of their responsibility to act on it, identify safety, quality, evidence based care pathways performance and other gain share elements, and intervene to improve individual patient outcomes, influence provider behavior for this patient, and patient compliance and decisions. (Operations will need a system that aggregates disparate data across multiple systems and care delivery sites and alerts care coordinators to issues needing attention). Development of processes and procedures to assure excellent patient and provider service and feedback loops to assure continuous improvement.
  • Infrastructure and IT:  Single integrated system to collect, report, and use information in real time to identify critical intervention points for individual patients and populations, (information must be aggregated from numerous independent systems across multiple care delivery sites), house other patient information that affects compliance, and create intuitive user interfaces for multiple care coordinators to easily use the same system, incorporating alerts for gaps in care, non-compliance, reminders for recurring lab and exams, etc.  Dashboards for stakeholders, leadership, operations, and clients.  QA for staff performance (automatic call recording, key word indexing, linkage to system records showing alerts and action taken).
  • Staffing:  Design team structure, define critical hard and soft skills for each position, recruit, train, supervise and evaluate staff, ongoing QA.

Given all the challenges, understanding what is available to buy can help organizations weigh and measure how much they must build and what their options are.  The legislation’s vision of independent providers working together on a single common EMR and providing consistent, reliable, and complete information on a routine basis is likely not practical.  Having those systems also provide the necessary timely feedback for multiple providers, educators, administrators, clinicians and patients without significant training is unrealistic.  Today providers use varying levels of automation and numerous discreet systems.  Standardization of data may be contractually required but how that data is collected and reported is going to be non-standard for the foreseeable future.  Even the model integrated systems using a single EMR are limited in the information they have collected.  Historical information, if entered, is generally scanned and cannot be searched or mined, and care delivered outside the system is not integrated.  For new patients or those with doctors both inside and outside the system the medical records are woefully incomplete.

A system that can aggregate data from multiple disparate systems is a critical component.  An organization staffed with well-trained, proficient clinicians and administrators who know how to use the system and support patients and providers in the new model is equally important.

For executives trying to make buy or build decisions, there are a number of important questions and assessments to be made.  Whether to focus on participating in the Medicare Shared Savings Program alone or also build capabilities to support employer programs (including their own employees) is an important consideration. The buy options will remain fluid for some time, as more and more entities emerge offering some or most of these components.

At least in the near term, buying shared operational, IT infrastructure and staffing may make the most sense for many organizations.   Over the next couple of years provider leaders can develop an understanding of the regulatory requirements, learn from observing a proven process, and assess the value of building in the future.

About the Author

With over 20 years experience in the health care field, Cathy Cather, Principal of Cather Consulting, is well versed in employee health benefits, product and program development, consumer research, and emerging trends.

In recent years, Ms. Cather has worked with employers to evaluate their benefit programs in light of changing economic times, investors considering new ventures, countries wanting to develop world class specialty surgical hospitals to attract American medical tourists including The Grand Bahama Port Authority, and health care benefit companies bringing new products to market including Accolade, a consumer services company that provides Personal Health Assistants to employees of major US corporations, HealthEquity, a consumer driven health care company focused on helping their members understand the financial side of health care, and HealthAllies a network company serving the uninsured.   Additionally, Ms. Cather worked with a number of UHG subsidiary companies including Uniprise, UnitedHealth Care, Ovations, and GoldenRule.

Prior to HealthAllies, Ms. Cather was at Towers Perrin, serving in a number of leadership roles including leading the Total Health Management Practice and co-leading the Health Care Strategy Initiative. Prior to joining Towers Perrin, she led the Integrated Benefits Practice at Aon (formerly Alexander & Alexander).


Ms. Cather was a founding member and board director of the Integrated Benefits Institute and a founding member and board director of the National Disability Management Employers Coalition.


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