ACOs

Screen Shot 2014-07-13 at 11.04.35 AM“Drugs don’t work in people who don’t take them.” C. Everett Koop, former US Surgeon General

Cost-based non-adherence, like any lack of medication adherence, leads to further complications and hospitalizations that could have been prevented. CMS appears to have recognized this when they announced that a new ACO measures on whether “providers have educated patients about the cost of medications” in the 2015 fee schedule.  Cost and quality conversations between doctors and patients are becoming a cornerstone to value-based care.

The most expensive drugs are the ones that the patient never takes.  Nearly one third of prescriptions go unfilled. When patients cannot afford a medication, and only discover the price or out-of-pocket cost at the prescription counter, it’s a big risk to long-term outcomes.

“It has been well established that a lack of affordability can drive a lack of adherence to a course of medications.  Patients who do not take their medications cost the U.S. healthcare system an estimated $300 billion in avoidable medical spending annually due to poorer health, more frequent hospitalizations and a higher risk of mortality”, according to The Center for Health Value Innovation and the Network for Health Value in Innovation.

A lack of medication adherence drives further costs for the system and suffering for patients. Estimates are that more than a third of medicine-related hospitalizations happen because people did not take medicine as directed, leading to over 125,000 deaths.

Medication non-adherence, of course, can have many reasons: side effects, difficulty in administering the drug, and others, but there is clear evidence that cost is a factor driving non-adherence. 27% of Americans did not fulfill a prescription due to financial hardship in 2012 according to a Kaiser Family Survey. As copays, deductibles and out-of-pocket expenses go up, so, likely, will non-adherence, and value-based care, and value-based benefits must understand the costs related to non-adherence.

Continue reading “The Cost-Response Curve”

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Screen Shot 2014-06-12 at 5.23.44 AMDoctors (and patients) must own their data or they will lose the most precious asset in healthcare and possibly their future.

I hate to be the voice that repeats what others are saying, however it was recently stated in the Wall Street Journal and has been retweeted in the digital health echo-chamber:  ”Data is the currency of healthcare”…and it is liquid.  Liquid gold.  It can be packaged, repurposed and traded for big money.

It hit me right between the eyes last year at the HIMSS conference – : who were all these people, and what were they peddling?  What are they making and what were they selling?  Data-Gold.   As a doctor on the front lines, I had a sinking feeling and the cold realization that while all the razzle-dazzle on the exhibition floor (complete with models, give-aways and million dollar booths), the data that was being traded was collected by doctors and provided by patients.  Simply put, patients are data and the doctors role is to collate, codify and create meta-data.  That is, doctors synthesize thedata presented and generate more data (diagnosis, treatment) which we then enter into a machine (electronic medical record).  That little machine is connected to some tubes and wires and the data defies gravity and heads straight up to the cloud.

The image that continues to torture my imagination is an army doctors, running from room to room on the proverbial hamster wheel of medicine entering data up to the cloud where nymphs with gold cups of champagne and data/analytics CEO’s were bathing in hundred dollar bills chortling merrily at their successes (on the backs of the data collectors).

While the Sugar Data’s mint cash, doctors are told they can expect decreasing reimbursement for the next decade.

Encyclopedia Britannica is a cautionary tale for doctors (and patients).  They had all the data but did not understand it’s value when digitized.  Wikipedia ate their lunch.  I had lunch the other day with a physician employed by a foundation and was flummoxed to hear that her $5,000 performance bonus check was going to the foundation, not her.  She had no idea, nor any access to the performace data and had it not been for an accidental letter sent to her about the check, she would have never known.  Ah, the dark art of data control.  If we as a society don’t get this digital health data ownership correct, actors will be creating the health version of credit default swaps.  oy.

Continue reading “Who Is Your Sugar Data?”

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Craig GarthwaiteOn Wednesday June 4, the Kellogg School of Management hosted its annual MacEachern Symposium. A packed auditorium listened to an impassioned discussion about The Future of the Physician. Presidential adviser Ezekiel Emanuel and AMA President Ardis Hoven were among the speakers. While Emanuel was optimistic about the impact of the Affordable Care Act on hospital-physician integration and the resulting potential for cost savings and quality improvements, Hoven was concerned about the impact of the business of healthcare on the medical profession. In this blog, we offer our perspective on the evolving role of the physician.

The hit television series Marcus Welby, MD last aired in 1976. Dr. Welby was the physician of every baby boomer’s dreams, whose patients always felt cared for and always got better. By the end of the century, Dr. Welby had been replaced by Dr. House, an MD cum Sherlock Holmes with Narcissistic Personality Disorder and an opiate addiction. While his bedside manner is decidedly not Welbyesque, Dr. House still embodied the basic premise of the all-knowing and dedicated provider that solves problems with little concerns for costs or standard practice.

But in the real world, physicians are evolving along a different—and we argue—better path. The 20th century physician was self-employed, championed the interests of patients, and had complete control over the medical system. But this system had at least two primary problems: (1) ever escalating costs and (2) dramatic variations in physician practice patterns with little connection to outcomes. We shudder to think how much Dr. House spent on his patients. This system is no longer sustainable.

Enter the 21st century physician, who is increasingly an employee of a large provider organization that scrutinizes every medical decision based on both cost and quality. We may all be better off for this transformation – the question is will we accept it? If past is prologue, we fear that American public is still not ready.

Continue reading “The Future of the Physician”

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Farzad MostashariLike many participants in the Medicare Shared Savings ACO Program (MSSP), Family Health ACO is sailing in uncharted waters.

All ACOs are facing significant challenges in better understanding patient utilization patterns, identifying high-risk patients, and implementing care coordination strategies.

Even more unique is that Family Health ACO (“Family Health”) is composed entirely of federally qualified health centers (FQHCs).  FQHCs are community based organizations that provide critical primary and preventive care for millions of underserved and uninsured Americans, regardless of their ability to pay.

Nationwide, there are over 1200 FQHCs serving the health care needs of the working poor, the unemployed, the undocumented, and anyone else in need of primary medical care. Family Health provides care to over 200,000 patients and spans nine counties in New York State; from the bustling streets of New York City to the rural landscapes of the Hudson Valley.

Partners in the Family Health ACO include Open Door Family Medical Centers (“Open Door”), The Institute for Family Health (“The Institute”), and Hudson River Health Care (HRHCare).

Collectively the ACO includes 120 physicians, 60 advanced practice nurses and physician assistants, and nearly 100 dental providers.

These organizations have a strong history of collaboration, including their first venture in 2008 to form the Hudson Information Technology for Community Health (HITCH). HITCH enabled the organizations to pool resources and work collaboratively on cancer screening and diabetes management outreach programs.

The ACO partnership is helping to further strengthen the ties between these three community-based health care organizations and their communities.

Continue reading “How Community Health Centers are Taking on Accountable Care for the Most Vulnerable”

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flying cadeuciiAs health care reform rolls out, there is a growing focus on restructuring the health service delivery system in the hope of improving health care quality and “bending the cost curve.”

A key part of this focus has been on physician organization and, in particular, moving toward large, multispecialty physician groups or hospital-physician systems that can provide integrated, coordinated patient care (e.g., through “Accountable Care Organizations”).

In a recent chapter in Advances in Health Care Management’s Annual Review of Health Care Management, however, we and our co-author Jeff Goldsmith find that there is little evidence for the superiority of these integrated models in terms of patient care quality or cost-savings, and that the trends toward physician consolidation has been much less dramatic than is often thought.

Using data from a variety of sources, we find there are two separate phenomena at work in physician organization. At one end of the spectrum (bottom tail of the size distribution of physician groups), the majority of physicians continue to practice in small groups, although there has been some movement from really small practices (one to three or four physicians) to slightly larger groups (five to nine physicians).

Still, nearly two-thirds of office-based physicians continue to practice in solo settings, two-person partnerships, and small (usually single specialty) groups with five or fewer physicians.

At the other end of the spectrum (upper tail of the distribution), however, is a smaller number of very large and rapidly growing multispecialty physician groups, which are often owned by hospitals, health plans, private equity firms, or other non-physician sponsors.

These two stories of what is happening in the distribution of physician group size are described as “a tale of two tails.”

Continue reading “What We’ve Learned from Horizontal and Vertical Integration of Physicians”

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Farzad MostashariSeveral of the provisions included within the Affordable Care Act in 2011 designate Accountable Care Organizations (ACOs) as formal, contractual entities.

However, in the real world ACOs come in a variety of shapes and sizes.

When compared to larger, hospital-sponsored ACOs, rural and small physician-led ACOs face a tough challenge, because despite limited resources they need to come up with substantial upfront capital and infrastructure investment to establish a strong ACO foundation.

To help ease this burden, 35 ACOs were selected to participate in the Advanced Payment Model ACO demonstration through a grant program from the Center for Medicare and Medicaid Innovation (CMMI). The grants provided a portion of upfront capital to determine whether or not this financial assistance would help ease the startup burden for smaller ACOs, and increase their success rate.

One of those 35 organizations includes the central Florida-based Physicians Collaborative Trust ACO, LLC (PCT-ACO). They are participants in the January 2013 Medicare Shared Savings Program (MSSP) ACO cohort, along with 106 other ACOs.

Larry Jones, PCT-ACO’s CEO, describes his personal mission as an effort to “preserve and protect the independent practice of medicine.” For over 25 years he has been advocating for physicians through their efforts to organize, negotiate with health plans, and other challenges.

Continue reading “What a Physician-Led ACO Can Teach Us about Getting It Right”

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Farzad Mostashari’s  post last week provoked a heated (to put it mildly) discussion between supporters and critics of the ACO model.

Farzad writes:

Commenters have raised several points regarding the early results of the Medicare Shared Savings Program that bear further discussion and clarification:

-The need for more details on the participants by name, along with their characteristics, actions, and outcomes.

I agree. We strongly encourage CMS to release more detailed information about the results of the program to date. As someone who’s been on the other side, I can attest however, that lack of transparency can occur despite the intentions of leadership, and even when there’s nothing to hide. CMS has taken great steps towards open data in recent years- unparalleled in its history (or in comparison to private sector payors and most states), but there is more work to be done to overcome institutional inertia, and concerns regarding the “privacy of providers”.

How is the MSSP different from an HMO?
A major similarity between managed care and “shared savings” programs is that physicians that make decisions about treatment, diagnostic, and referral options do have an incentive to reduce cost. I was trained in an era where we were not supposed to think about (or even be aware of) the cost implications of our care recommendations. I now believe that we need physician engagement in addressing the truly unsustainable rise in healthcare costs that threaten to bankrupt our nation.

However, policymakers have learned a few lessons from the backlash against managed care:

Quality Matters
Reducing cost cannot be the only outcome. In the MSSP, in the first year only can you qualify for savings simply by reporting quality measures. In future years, ACOs will have to not only reduce total cost but also perform well on measures of patient satisfaction, clinical quality, and utilization (such as ambulatory care sensitive admissions) to collect shared savings payments.

What about patient choice?
If the patient doesn’t like the care they’re getting, they can get care elsewhere. This is a sore point for many ACOs, especially those that have been successful in managed care arrangements, but the current regulations in no way limit patients’ ability to seek care elsewhere. MSSPs are required to notify patients that they have formed an ACO, and patients have the option of opting out of the sharing of their claims data with the ACO.

Shared Savings versus capitation
Finally, the MSSP program is indeed layered on top of fee-for-service payments (versus prospective payments/ capitation), and most MSSPs have opted for the “upside only” track for the first three years. We acknowledge that where the ACO includes a hospital sponsor, they must contend with “demand destruction” on their fee-for-service lines of business if they reduce procedures, admissions and emergency department visits. However, physician-led ACOs are not similarly encumbered, and this model provides them with a “safe” transitional path towards taking risk. It is also worth noting that “one-sided risk” during the riskiest early transition period would tend to reduce the likelihood of a physician having to choose between limiting needed care and going bankrupt.

Continue reading “The ACO Hypothesis: Farzad Mostashari Responds”

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In 1980, while working at the University of Chicago Pritzker School of Medicine, I wrote an article for the Harvard Business Review entitled “The Health Care Market: Can Hospitals Survive?”. This article, and the book which followed, argued that hospitals faced a tripartite existential threat:

1)  ambulatory technologies that would enable physicians to compete successfully with hospitals at lower cost in their offices or freestanding settings, 2)  post-acute technologies that would enable presently hospitalized patients to be managed at home and 3) rapidly growing managed care plans that would “ration” inpatient care and bargain aggressively to pay less for the care actually provided.

I predicted a significant decline in inpatient care in the future, and urged hospitals to diversify aggressively into ambulatory and post acute services.   Many did so.  A smaller number, led by organizations like Henry Ford Health System of Detroit and Utah’s Intermountain Health Care, also sponsored health insurance plans and became what are called today “Integrated Delivery Networks” (IDN’s).

In the ensuing thirty years, US hospital inpatient census fell more than 30%, despite ninety million more Americans.   However, hospitals’ ambulatory services volume more than tripled, more than offsetting the inpatient losses; the hospital industry’s total revenues grew almost ten fold.

Ironically, this ambulatory care explosion is now the main reason why healthcare in the US costs so much more than in other countries.  We use far fewer days of inpatient care than any other country in the world.  But as the McKinsey Global Institute showed in 2008 ambulatory spending accounts for two thirds of the difference between what the US spends on healthcare and what other countries spend, far outstripping the contribution of higher drug prices or our multi-payer health financing system.

Continue reading “Can Hospitals Survive? Part II”

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Last month, the Center for Medicare and Medicaid Services (CMS) reported first-year results from the Medicare Shared Saving Accountable Care Organization Program (MSSP).

As noted in a previous post, shifting to an accountable care model is a long-term, multi-year transition that requires major overhauls to care delivery processes, technology systems, operations, and governance, as well as coordinating efforts with new partners and payers.

Participants in the MSSP program are also taking much more responsibility and risk when it comes to the effectiveness and quality of care delivered.

Given these complexities, it is no surprise that MSSP’s first year results (released January 30, 2014) were mixed. The good news? Of the 114 ACOs in the program, 54 of the ACOs saved money and 29 saved enough money to receive bonus payments.

The 54 ACOs that saved money produced shared net savings of $126 million, while Medicare will see $128 million in total trust fund savings.

At the time, CMS did not provide additional information about the ACOs with savings versus those without.

While a more complete understanding of their characteristics and actions will be necessary to understand what drives ACO success, the recent disclosure of the 29 ACOs that received bonus payments allows us to offer some preliminary interpretations.

Continue reading “The ACO Hypothesis: What We’re Learning”

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Since CMS’s Center for Medicare and Medicaid Innovation launched three years ago, its staff have been frequently hailed for undertaking an ambitious research agenda.

But a New York Times story this week was eye-catching for a different reason: author Gina Kolata mostly assailed Medicare’s researchers for how they’re choosing to do that research.

“Experts say the center is now squandering a crucial opportunity,” Kolata wrote in a front-page article. ”Many researchers and economists are disturbed that [CMMI] is not using randomized clinical trials, the rigorous method that is widely considered the gold standard in medical and social science research.”

But many researchers and economists that I talked to at this week’s Academy Health conference say that’s not the case at all. (And some were disturbed to learn that they were supposed to be disturbed.)

“RCTs are helpful in answering narrowly tailored questions,” Harvard’s Ashish Jha told me. “Something like—does aspirin reduce 30-day mortality rates for heart attack patients.”

“However, for many interventions, RCTs may be either not feasible or practical.”

“While RCTs may be the gold standard for testing some hypotheses, it is not necessarily the most effective or desirable model for testing all hypotheses,” agrees Piper Su, the Advisory Board’s vice president of health policy.

CMMI’s ambitious goals

On its surface, Kolata’s article is built around a reasonable conclusion: RCTs offer plenty of value in health care, and we’d benefit from more of them.

  • As Jha alludes to, think of a double-blinded pharmaceutical study where half the participants randomly get a new drug and the other half get a placebo; that’s an RCT.
  • The famous RAND study that found having health insurance changes patients’ behavior: An RCT.
  • The ongoing Oregon Health Insurance Experiment: Also, an RCT.

And it’s fair to examine how CMMI is pursuing its research, too.

Continue reading “What the New York Times Got Wrong about Medicare’s Innovation Center”

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