The Nitty-Gritty
So how would such organizations actually work? Dr. Tallia sees three absolutes: local accountability, shared savings, and performance measurements. Beyond those necessities, the details begin to blur. The bad taste left by the widely despised capitation payment systems of the 1980s and ’90s has made experts wary of dwelling on the similarities between ACOs and fixed, prepaid capitation plans. Any mention of the C-word, in fact, is followed almost immediately by a caveat: This is a flexible, big-tent strategy that avoids any one-size-fits-all payment prescriptions. And most advocates are emphasizing that ACOs should be voluntary.
Analyses have suggested that in order to succeed, an ACO should enroll 5,000 or more Medicare beneficiaries, or at least 15,000 privately insured patients. Which combination of patients and providers should be included has been left vague to allow emerging networks to tailor the model to their own needs. Some experts differ as to whether hospitals are a necessary component, though almost all agree on the need to include primary-care providers.
Dr. Tallia envisions his medical-school-based linkup as a marriage between New Jersey’s largest multispecialty medical network, the Robert Wood Johnson Medical Group, and the 30% to 40% of primary-care practices in the state that already have relationships with the school. “If you marry the primary-care relationships to the subspecialty care in the Robert Wood Johnson Medical Group and then tie in the area hospitals, by golly, you’ve got an ACO,” he says.
Robert Wood Johnson University Hospital is building an inpatient hospitalist service that will become an integral part of that mission, he says, with its focus on increasing efficiency, reducing the length of hospital stays, appropriate testing and handoffs, and proper communication with other care providers prior to hospital discharges.
ACO Outreach
But any system in which success leads to fewer hospitalizations also needs buy-in from those who stand to lose business. In short, hospitalists and other specialists will need financial incentives, too. That reward system, in turn, requires the right formula for setting and regularly measuring quality standards.
Based on initial savings estimates, however, Dr. Tallia isn’t worried about anyone missing out on a slice of the pie. “We’re looking at somewhere between 15% and 25% cost reductions,” he says, adding participants should gain sizable rewards. Initially, he says, he hopes to start with 5,000 to 10,000 enrollees and launch demonstration projects targeting patient subsets like Medicare beneficiaries and those insured by large employer groups. Ultimately, he’d love to have half of the state’s insured population.
From its own database models, Virginia’s Carilion Clinic estimates that its doctor group takes care of as many as 60,000 Medicare patients per year, with a strong tilt toward primary-care providers. For the past six months, the clinic has been working to identify the geographical scope and specific subset of beneficiaries that would work best for the pilot.
Once it settles on the best combination, Dr. Werner says, the clinic can look at that group’s historical spend rate over the past few years, then agree on a reduction in the rate of growth by, say, 1.5%. “If we’re able to have reductions that exceed 1.5 percent, we would have an opportunity to share in those reductions,” he says.
HM Front and Center
If all goes well, the first pieces of the Carilion ACO will be in place by Jan. 1, and Ralph Whatley, MD, chair of the department of medicine, says the hospitalist program will be “ground zero” in helping to smooth the transition through the proper handling of admissions, discharges, and handoffs of care. “If we do our job as an accountable care organization well, one of the things we should see is that we have less admissions to our hospitalist service,” Dr. Whatley says, especially as the management of such conditions as chronic diseases moves to outpatient settings. Nevertheless, “we can have our hospitalists front and center in the efforts to make the acute management of illness that requires the inpatient setting more efficient, less costly, and with better outcomes.”