Accountable Care Organizations - Democratic Group Practice Section Newsletter, September 2013
Michael L. Becker, MD, FACEP
On March 31st 2011, the Department of Health and Human Services (HHS) released the proposed new rules to help doctors, hospitals, and other providers better coordinate care for Medicare patients through Accountable Care Organizations (ACOs). The logic behind the ACO model is that 25% of Americans and 66% of those over 65 have a chronic disease, resulting in 93% of the Medicare expenditures. It is believed that improved coordination of the care will result in improved outcomes and cost savings of $960 million over a three-year period.1
Despite the fact that two years have passed since this announcement, a March 2013 survey in Becker’s Hospital Review found that only 30-50% of physicians surveyed are familiar with the term ACO.2 Once referred to as unicorns3 (mythical beasts that many have heard of, but never seen) there are now hundreds of ACOs across the nation.
Regardless of the future political climate or the success of this attempt at reform, change is inevitable as current health care economics are not sustainable. We can no longer afford to spend 20% of the United States GDP on health care. Emergency medicine practices are not excluded from these changes. Smaller democratic groups may not have the same resources as large health care systems and must be cognizant of the changes and willing to adapt.
I recently sat down with some leaders of health care change to discuss ACOs in an attempt to better understand these changes:
Rob Brenner, MD - Chief Medical Officer of Summit Medical Group
Summit Medical Group is a multi-specialty physician group formed in 1929. With over 300 providers in five counties and twenty-eight locations, their goal is to have integrated and comprehensive care under one roof. There are over 1,300 employees with most every adult specialty represented. Summit Medical Group is an independent, for profit, rapidly growing physician run and owned specialty group.
Rick Grunau, MD - Senior Advisor (former CEO) of Emergency Medical Associates
Emergency Medical Associates is a privately held, democratic, physician-owned partnership. Emergency Medical Associates has been delivering superior emergency medicine to larger volume hospitals since 1977 with over 400 physicians servicing 25 EDs.
Bruce Van Cleave, MD - Senior vice president and chief medical officer for Aurora Health Care
Aurora Health Care is an integrated not-for-profit health care provider serving communities throughout eastern Wisconsin and northern Illinois. With 15 different hospitals in the region, Aurora is Wisconsin’s largest private employer.
How is an ACO different than a Health Maintenance Organization (HMO)?
Dr. Grunau: Let’s start with similarities. The US health care system is not working for patients, and probably not working for providers. It's too expensive, very fragmented and the handoffs between the different silos cause a lot of problems—not least the quality of care. For most patients with a serious illness it is a horrible experience to navigate the system. Americans don’t like their health care choices limited and that is what happened with managed care.
Dr. Van Cleve: ACOs and HMOs are both designed to address issues of cost and quality. HMOs focused on restricting access and ACOs are focused on improving care for populations. ACOs are centered on the Institute for Healthcare Improvement's (IHI) triple aim: improving the patient experience of care (including quality and satisfaction), improving the health of populations and reducing the per capita cost of health care. The focus of ACOs is around transitions of care and handoffs whereas HMOs were focused on cost reduction.
Dr. Brenner: The main thing that is different with ACOs vs. HMOs is that HMOs had capitation on expenses without ensuring increases in quality. The risk was shifted to the level of the physician-- a unit per member per month. In an ACO, it is about population management. What is the overall cost of care compared to a similar population?
Dr. Grunau: ACOs do represent an attempt to deal with the fundamental negative forces mentioned above. The most defined example of ACOs is the Medicare example. There are over 400 ACOs and more than half are in the private sphere. The number of physician-run ACOs just exceeded hospital run ACOs in January 2013. The difference today is that managed care didn’t focus on choice or satisfaction.
What are the benefits of an ACO?
Dr. Van Cleve: From the health system perspective, if you believe in an ACO you believe that you can manage a population and ultimately reduce the cost because of focus on quality and transitions of care. From the physician perspective, if they believe it is the right thing for the patient, which I do, then they will be engaged. They need to be engaged with a wider lens—focusing on the long-term goals of healthy patients as opposed to acute episodes of care. We need to incentivize physicians to have longer conversations about long-term health, phone conversations and email exchanges with patients. They have to be excited about the system, which ultimately benefits the patient.
Dr. Grunau: A benefit to patients is that choice is not restricted in the Medicare ACO and both private and Medicare ACOs are driven by satisfaction and quality metrics. ACOs are just a step toward more comprehensive change. Most of this is about coordination of care. Large organizations can probably do this best and the delivery of care needs to be re-designed around patients and not providers.
Patients and physicians are the main drivers of cost. What will the results of controlling these look like?
Dr. Brenner: The individual physician makes 70% of the cost driving decisions. You have to approach that incrementally. We are beginning to look at individual practice variation, but most of our recent initiatives have been system-wide changes in the background like care management, use of clinical registries, etc.
As a multispecialty group we are taking a lot of steps to move along Don Berwick’s triple aim to lower costs, improve the individual experience and manage populations. We are approaching this by putting in things like a hospitalist program that has resulted in decreased length of stay for hospitalized patients and decreased readmissions. We also put into place tele-health, geriatric management and a care transitions team. There is an enormous cost savings opportunity around transitions of care by simply closing gaps in communication and handoffs.
Dr. Van Cleve: This will be really a change in the role of the physicians. There will be incentives to facilitate these changes. I can recall reviewing resources utilization in the old HMO models and the number of patients who had a follow up CXR for pneumonia was directly proportionate to the practice having an x-ray machine in the office. The incentives have to change from a cost based fee for service to outcomes based practice.
Dr. Grunau: Robert Kaplan and Michael Porter at the Harvard Business School would argue that the reason we are having trouble controlling health care costs is that we don’t know what they are. Everybody looks at charges, which is a useless measurement of actual cost. Organizations may have to use a different method of activity-based accounting to look at the real costs.
What will be the future of contracted groups in ACO models?
Dr. Brenner: There is a massive consolidation that has gone on due to the cost of support infrastructures. We have a quality team and IT infrastructure to do things like PQRS for example. Not only will groups need an EMR, but other software to manage the EMR and ancillary support such as care management and pharmacy.
We utilize care management to determine, for example, which diabetic patients need their eyes checked. The care manager calls the patient and gets them in to be seen. Doing care management through our own physician-lead specialty group yields better results then if an insurance company were to manage this.
We are doing well in terms of our contracting and as long as we continue to control costs and improve outcomes we will remain viable. I am not sure how a small independent group can support the required infrastructure.
Dr. Van Cleve: Incentives to contracted groups for outcomes. Currently our Aurora employees are being incentivized on 1) Resource utilization, 2) Patient loyalty, and 3) Quality Metrics. The same incentives can be applied to contracted groups.
Dr. Grunau: There is a movement in bigger hospitals to get emergency and hospitalist groups to combine for the contract. The single hospital emergency physicians group may well be going the way of the dinosaur. EMA is working to be seen by the hospital and ACOs as proactive and an early mover. We are pushing our ED leaders to become local ACO leaders. We are in the early phases of educating primary care physicians on the importance of emergency physicians in the ACO.
The forgotten stepchild of health care reform is the ED. A lot of people see it as the problem that needs to be fixed, but we are the health care system for many patients given the lack of primary care or the restrictions of traditional office hours. We (emergency physicians) influence 30% of the health care budget as we make about 50% of the admission decisions and up to 65% of Medicare admission decisions—a big driver of cost. Every American, as a patient or visitor, comes through the ED once every two years. Most of the action is happening in the ED and we need to have a seat at the table of this discussion.
How any ACO’s shared savings are divided may be a precursor for how most of the revenues are divided in the future. Emergency Medicine, although a specialty, is really the “other primary care” although we don’t have the option of batching our patients during weekday hours, which decreases cost. Emergency physicians need to participate in these discussions because our portion of initial shared savings may be a legacy we live with for the foreseeable future.
What is the future of fee-for-service or will there be more bundled payments?
Dr. Van Cleve: Bundled payments may not work. It is too complicated. There are too many variables and too many people. Take cardiac care for example. There are a lot of people involved in that care from ED physicians to cardiothoracic surgeons, cardiologist, radiology, etc. It is simply too hard to piece each part out especially when some have little effect on the overall outcome.
Dr. Grunau: I am being told that bundled payments are the talk in Washington now. These are generally attached to well-defined episodes of care like hip-replacement and CABG. CMS is working hard to look at more of these. This is the beginning of a shift to more global payments for outcomes. Emergency physicians need to be in the discussions on how they fit into these payments.
Perhaps I am just new to the discussion, but what is the rush, and why are we talking about this now and acting so quickly?
Dr. Van Cleve: The movement for cost reduction started in 1985 with Diagnosis Related Groups (DRGs). Change takes a long time—longer than in business. Atul Gawande in a recent New Yorker article4 talked about how the Cheesecake Factory can bring a recipe to the table in less than two months. A new drug gets to a physician’s practice in 10 years. Medical decisions and practices are incredibly complex and physicians are trained to follow certain procedures and protocols and be stringent about some processes. We measured the steps from a medication order to administration of that medicine and it is over 40 steps. Change will happen, but will take time.
Dr. Brenner: Our legislators are trying to do something about this cost-curve, as we cannot sustain a health care system at 20% of GDP—which is where we are headed. It will hurt our economy. The question is what do we put into place quickly. Is the answer in fixes to the sustainable growth rate for Medicare? Are the cuts on the physician side, the hospital side, or device/pharmaceutical side? I feel like I am part of history as there will be drastic changes in the health care delivery system in the US. I don’t know if the ACO model will work, what we may be seeing is a step towards something different.
Thank you to Drs. Brenner, Van Cleve, and Grunau for your time and expertise. While the future of health care is yet to be defined, certainly the concepts of quality outcomes, patient experience and transitions of care will be the talking points. I am not sure that anybody knows exactly how emergency medicine fits into this equation, but as we are the “other primary care” and make decisions to admit a large percentage of patients, it is important that we remain engaged in the discussions.
- Berwick D. March 2011. ACOs Improving Care Coordination for People with Medicare. www.healthcare.gov/news/factsheets/2011/03/accountablecare03312011a.html
- Punke H. March 2013 Survey: Majority of Physicians Unfamiliar With ACOs. www.beckershospitalreview.com/accountable-care-organizations/survey-majority-of-physicians-unfamiliar-with-acos-pcmhs.html
- Cliff S. July 2012. In Massachusetts, an ACO that’s actually working. http://www.washingtonpost.com/blogs/wonkblog/wp/2012/07/12/in-massachusetts-an-accountable-care-organization-thats-actually-working
- Gawande A. August 2012 Restaurant chains have managed to combine quality control, cost control and innovation. Can health care? www.newyorker.com/reporting/2012/08/13/120813fa_fact_gawande
A CEO’s Guide to a Democratic Model - Democratic Group Practice Section Newsletter, September 2013
Savoy Brummer, MD
Every time I speak about democratic models to physicians, the clear benefits of ownership and voting resonate with potential Partners and Shareholders. However, when coming across hospital administrators, these benefits are not necessary translated to C-suite administrators. They are looking for performance and cost as it relates to the hospital, and not necessarily what is best for the individual physician. Of course this attitude is not universal, but it seems as if we have some work we can do to effectively communicate the benefits of democratic groups to our hospital’s administrators. Here are some ideas.
- Democratic groups create happier physicians. Now you may think that I am immediately going against what I just opened this article with, however this does have merit. Happier physicians create longevity. Longevity allows for standardization of operations and processes. It is indeed very six sigma and a major contributor of cutting out the fat of costs of health care and testing and also improving patient quality. These are items that hospitals are incentivized to address.
- Democratic groups provide better value. Now you’ve got to notice that I didn’t say democratic groups were cheaper, rather they offer a better bang for the hospital’s buck. Instead of third party, private equity groups that take their percentage off first, money that is produced is returned directly back to the providers. You’re not paying a third party to do a job that is on many occasions mediocre in performance. Democratic groups reduce these costs relative to performance for hospitals and physicians.
- Democratic groups create the ultimate physician alignment. Now hold up, I know that you’re thinking an employed model is the gold standard for physician alignment; but in fact this is not true. Democratic groups and owners do things because their viability and presence is directly tied to the performance of the contract. An employee of the hospital, even with incentives for performance, still only acts to meet the expectation placed in front them. Physicians that are part of non-democratic groups never quite get the answer to the most basic of capitalistic questions, “What’s in it for me?” Only democratic groups understand that complete alignment comes when the hospital succeeds and each person of the practice has an obligation to make that happen.
- Democratic groups create physician leadership. This just piggybacks on the realization that democratic groups are full of physician leaders. It’s not up to the CMO or CNO to determine the means to fix the issues. Democratic groups have individuals that accept the responsibility and opportunity to be solution-drivers. The amount of time and energy that administrators have to spend can now be moved to higher level items and leave many of the daily needs of problem solving to the physicians of democratic groups.
Take these pearls as ammunition when your administrators evaluate the structure of your practice and that of your hospitals. It is important that we start to effectively brand our democratic practice model in a more concrete way for our hospital administrators to understand.
Make plans to attend the Democratic Group Practice Section Meeting - Democratic Group Practice Section Newsletter, September 2013
If you are attending ACEP13 in Seattle come join your colleagues for lunch and participate in the discussion about Democratic Group Practice.
Democratic Group Practice Section Meeting
Tuesday, October 15, 2013
11:00 am – 1:00 pm
Sheraton Seattle, Willow A
Speaker: Rick Grunau, MD
Be sure to check the schedule on-site as meeting time and location could change.
Special thanks to CEP America and Emergency Medical Associates for sponsoring lunch.
Attend the Sections Showcase during ACEP13!
Find your niche.
Build your network in Emergency Medicine.
Visit the Sections Showcase!
Exhibit Hall Sky Bridge, Washington State Convention Center
Monday, October 14, 2013
9:30 AM - 11:00 AM
University of Florida, College of Medicine /
Network for Pancreatic Organ Donors with Diabetes (nPOD)