The Impact of Accountable Care Organizations on the Healthcare Industry. Dale Maxwell Senior Vice President & CFO Presbyterian Healthcare Services
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1 The Impact of Accountable Care Organizations on the Healthcare Industry Dale Maxwell Senior Vice President & CFO Presbyterian Healthcare Services
2 Agenda The Case for Change A New Idea, The ACO Characteristics of an ACO Getting Ready A Real Life Example 2
3
4 The Case for Change 4
5 A Final Thought It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change. -Charles Darwin 5
6 Our Economy, Ugh Regional Employment Growth November 2012 over November 2011
7 It s About our National Economy 7
8 Affordability: It s About the Consumer 8
9 Components of Healthcare Costs Population Utilization Intracase Utilization Cost per process = Healthcare cost per individual Admissions Surgeries ER Visits Patient Days CT scans Lab tests Supplies Staffing Overhead How much we use How much it costs
10 Access: Supply vs. Demand 10
11 It s About the Quality of Care and Outcomes 11
12
13 Every 10 Year Transition Medicare introduced in 1965 Passage of the Health Maintenance Organization Act of 1973 Introduction of Diagnosis-related group (DRG) in the early 80s Formation of Physician-Hospital Organizations in the 80s Clinton administration s efforts to reform healthcare in the 1990s 13
14 A New Concept: The Accountable Care Organization (ACO)
15 What the Heck is an ACO? 15
16 16
17 17
18 What is an ACO? An Accountable Care Organization (ACO), is a group of providers who come together to accept risk for the medical costs of a defined population. In return, the ACO is rewarded for reducing costs by shared savings. 18
19 19
20 Key Characteristics of Accountable Care
21 Implications for the Industry High Level of Integration Low Fee-for-Service Payment Model Full Capitation 21
22 Difference Between an ACO and an HMO General Characteristic HMO ACO Geographic coverage Defined region Primary coverage based on primary care provider but also responsible for services provided outside the local area Stakeholders Patient mix Hospitals, physician organizations Hospitals, physician organizations Public ACO: minimum of 5000 Medicare patients (mixed patient demographics) Private: varies according to payer plan Care coordination Restricted through Increased flexibility contracting options Payment model FFS shifting to P4P P4P, partial capitation, bundled payments Performance measure HEDIS Locus of control Payer organization Physician Public: PQRI, meaningful use Private: HEDIS, NCQA, Premier
23 Key Characteristics Clinical Integration provides a conduit between various providers. Accumulation and sharing of information, leading to better outcomes Coordination of Care provide the care at the right time and at the right place Patient Engagement Empower and engage the patient, self-care concepts Financial Management Systems Highly competent staff and financial systems 23
24 Purpose is to Drive Alignment Reasons for: Declining physician incomes Changing physician demographics Realizing greater economies of scale Opportunity to improve reimbursement Offset physician shortages Improved patient outcomes 24
25 Purpose is to Drive Alignment Challenges Cultural hospitals, physicians and payers have different cultures Operational hospitals work separately while physicians work collaboratively Trust historical mistrust Autonomy and control who drives the bus? Sharing revenue how do you divide up the dollar? Capital where does the startup money come from? 25
26 What Will They Look Like? IPA-Directed Lead by Primary Care Providers with specialty groups and hospitals in the subordinate position, PCMH Multispecialty Physician Group Directed Directs ACO with the hospital subordinate Physician-hospital Organization Directed Partnerships with physician practices to take risk Integrated Delivery Network Directed Has control over hospitals, physicians, and ancillary services 26
27 What Will They Look Like? Limited Alignment Participation in managed care network Call coverage agreements with hospitals Hospital medical directorships Moderate Alignment Targeted cost incentives Joint ventures Full Alignment Employment Clinic model 27
28 Various Payment Models Full Prepayment Global Care Rates PCMH Reimbursement Fee-for-Service Loss of Autonomy Managed Care Network (IPAs, PHOs) Private Mergers Limited Alignment/ Integration Moderate Alignment/ Integration Full Alignment/ Integration Continuum of Reimbursement Design Outcome Measures Large % of Total Payment Care Coordination; Moderate % of Total Payments Simple (Mostly FFS); Small % Of Non-FFS Payments Greater Integration/Alignment
29 Getting Ready 29
30 Getting Ready Conduct self organizational assessment Organization culture and accountability level Clinical quality results Infrastructure Current Leadership Information and ability to share Current cost structure Do you have adequate access to capital Are you ready to take risk? 30
31 Getting Ready Conduct partner organizational assessment What is their vision? Can your organization collaborate with this partner? What is their level of clinical quality? Can they demonstrate cost effective care? How does = 3? 31
32 Where To Go From Here Step back and assess your long term vision You better prepare yourself for change, it s here and even this will change Take control of your own destiny, don t sit back and let it happen to you Know where you are at, and where you want to go Smile 32
33 Questions? 33
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