5/13/2011. ACO Partnerships A Case Study. Contents: The Strategic Imperative for Accountable Care

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1 ACO Partnerships A Case Study Bob Edmondson, MPH Vice President, Innovation West Penn Allegheny Health System Pittsburgh, PA 1 Contents: 1. The Strategic Imperative for Accountable Care 2. Population Health Management 3. The Micro-ACO Model 4. Case Study Results 2 The Strategic Imperative for Accountable Care 3 1

2 The Problem: Healthcare expenditures engulfs too much of the economy with no end in sight 4 Accountable Care represents a revolutionary shift in the healthcare business model From: Treating individuals when they get sick Emphasizing volumes Maximizing the use resources/assets Offering care at centralized facilities Treating all patients the same Avoiding the sickest chronic patients Being responsible for those who seek our services (Market Share) To: Keeping groups of people healthy Emphasizing outcomes Applying appropriate levels of care at the right place Offering care at sites convenient to patients Customizing care for each patient Creating venues to provide special chronic care services Being responsible for the needs of all our people (Community) Questions: 1. Why do this? 2. Haven t we been here before? 3. Why not wait for repeal of reform? Answer: Cost/quality pressures are driving the convergence of forces and shifting the foundation of healthcare Patients Purchasers Quality Technology 2

3 Patients: Demanding Value Communication Convenience Information Comparative data (Consumer Reports) Clarity On-line access Instant reporting/follow-up Health promotion guidance and support All at a lower cost!! The Purchaser: Private Pay and Federal Reforms Transition from fee-for-service to bundled and risk-based payments Reduced payments to hospitals for excessive readmissions and hospital-acquired conditions Emphasis on quality, efficiency and patient-centerdness Shared savings between payers and providers Use of evidence-based medicine and coordinated care Accountable Care Organizations and Patient-Centered Medical Homes ACO PCMH Technology: Transformative applications increase value and effectively manage care Electronic Health Records Patient Portals Interfaces Use of PDA s and handheld devices Real-time imaging 9 3

4 Driving value up and creating new demand 5/13/2011 Key Question: How do we create value when we have to do more with less? 10 Value Innovation for Accountable Care Blue Ocean Strategy: The Simultaneous Pursuit of Differentiation and Low Cost Cost Value Innovation Buyer Value Eliminate and/or reduce the factors an industry competes on = cost savings Raise poorly offered elements and/or create elements the industry has never offered = raise/create value Source: W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Press, Boston, 2005, 11 The Four Actions Framework Builds the Foundation for Accountable Care Driving Costs Down Eliminate Unnecessary and redundant testing Avoidable hospital readmissions Use of paper documentation Hospital-acquired infections Reduce Fragmented approach to care Overall hospital admissions One-on-one and face-to-face provider visits Poor health maintenance Use of phone and fax Raise Chronic disease management Patient engagement in their care Home monitoring and follow-up Health promotion Screenings Create Integrated networks Patient care teams Patient registries Patient portals Virtual visits Multiple access points Source: W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Press, Boston, 2005, 12 4

5 Population Health Management 13 Healthcare Delivery Today Individual experiences health need or event Healthcare Delivery Tomorrow Population assigned to an ACO/PCMH Accesses health system and receives unit of service Payment for unit of service ACO/PCMH customizes health plan to fit individual needs Payments by PMPM, bundles, P4P, FFS and Shared Savings Patient discharged with limited information and follow-up Patient actively participates in health promotion and care Principles of Population Health Management Manage patient population through risk stratification Keep healthy people healthy Keep sick people from getting sicker Aggressively manage high risk population Use evidence and threat-based resourcing Maintain 90-95% panel participation and keep 75-85% at low-risk Partners: health plan, pharmaceutical company, consumers/patients, community resources 15 5

6 Risk Stratification Objective Health High Low High Healthy 80% Undiagnosed 5% Perceived Health Low Worried Well 10% Ill 5% Up to 50% of Medical Costs 16 Core Tenets of Population Health Management 1. Individuals can maintain low-risk health status even as they age 2. A Patient-Centered Medical Home can help patients obtain and maintain low-risk health status 3. The major economic benefit is paying attention to those with low risk, keeping them there and aggressively managing those with high-risk 4. As patient population health is maintained panels can expand the number of patients (doing more with less) 17 Payment Reform Target Re admissions Almost twenty percent of Medicare patients are readmitted within 30 days resulting in $15B in cost to the program 2005 Medicare Payments Related to Readmits Average Medicare 30-Day Readmission Rate Potentially Avoidable Readmits: $12B Unavoidable Readmits: $3B Source; Healthcare Financial Management Association 18 6

7 Avoiding Readmissions Source: Healthways 19 Avoiding Readmissions Source: Healthways 20 Avoiding Readmissions Engage each patient in the most effective way for them Interventions: Follow-up appointments, medication management, etc Interact with Primary Care Physicians to keep them informed Work with patient as appropriate based on their location After 30 days, patient placed in surveillance program 21 Source: Healthways 21 7

8 The Micro-ACO Model 22 Hospital-based ACO Partnership 200-Bed community hospital in the northeast Diverse mission with multiple special programs e.g. homeless, methadone treatment program, ethnically diverse population, DSH status A Multispecialty group led by a geriatrician with expertise in disease management 13 years experience at full risk for a Medicare population 5100 patients enrolled in Health Plan Structure of the ACO 600 Specialists Independent Physicians 124 Primary Care Group Practice (Employed) Community Hospital SNF s with Hospitalists Group Practice Home Care Telehealth Independent Physicians FFS Payments 120% of Medicare $70M Full Risk with Shared Savings

9 The Micro-ACO Model Hospital Key Clinical Management Activities Primary Care Hospital Skilled Nursing Facility Home Care Telehealth Real time MD availability for urgent needs Assure admission to lower cost, in network hospitals Patient centered Dedicated medical home hospitalists optimally manage care Steer patients to lower levels of post acute care Assure admission to lower cost, innetwork SNF, TCU, rehab Proactive health management Steer patients to SNFist manage Urgent care, walkins, retail clinics lower levels of care nursing home care with PCP Aggressive case management Rehab management Robust in home Phillips training in disease self management, patient engagement Home visits: VNA growth from 65,000 in 2008 to 80,000 in 2009 telehealth for sickest patients In-home monitoring Post-admission follow-up and tracking Case Study Results 27 9

10 Results ACO Results ACO Results ACO 10

11 Results ACO Results PCP s earned $$ in excess of MCare Net revenue to hospital with At-Risk Surplus added in when compared to Medicare is $6,951,000 Results 11

12 Growth in Residuals for Shared Savings $10,000 ACO Shared Savings FY (in 000 s) $9,000 $8,000 $6,000 $5,000 $4,000 $2,000 $607 $2,000 $ The key: Disease Management!! Disease Management Outcomes: 52.0% 51.0% 50.0% 49.0% 48.0% 47.0% 46.0% 45.0% 44.0% 43.0% 42.0% 41.0% 2001 Qtr Qtr 3 Top 3% Users as % of Budget: Started Disease Management 2002 Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr 1 49% 43% = $5,000,000 /year savings Questions and Discussion 36 12