But ACOs could pave the way for more significant cost-cutting based on competition.
By KEN TERRY
The Medicare Shared Savings Program (MSSP), it was revealed recently, achieved a net savings of $314 million in 2017. Although laudable, this victory represents a rounding error on what Medicare spent in 2017 and is far less than the growth in Medicare spending for that year. It also follows two years of net losses for the MSSP, so it’s clearly way too soon for anyone to claim that the program is a success.
The same is true of accountable care organizations (ACOs). About a third of the 472 ACOs in the MSSP received a total of $780 million in shared savings from the Centers for Medicare and Medicaid Services (CMS) in 2017 out of the program’s gross savings of nearly $1.1 billion. The other MSSP ACOs received nothing, either because they didn’t save money or because their savings were insufficient to qualify them for bonuses. It is not known how many of the 838 ACOs that contracted with CMS and/or commercial insurers in 2016 cut health spending or by how much. What is known is that organizations that take financial risk have a greater incentive to cut costs than those that don’t. Less than one in five MSSP participants are doing so today, but half of all ACOs have at least one contract that includes downside risk.
As ACOS gain more experience and expand into financial risk, it is possible they will have a bigger impact. In fact, the ACOs that received MSSP bonuses in 2017 tended to be those that had participated in the program longer—an indication that experience does make a difference.
However, ACOs on their own will never be the silver bullet that finally kills out-of-control health spending. To begin with, 58 percent of ACOs are led by or include hospitals, which have no real incentive to cut payers’ costs. Even if some hospitals receive a share of savings from the MSSP and/or private insurers, that’s still a drop in the bucket compared to the amount of revenue they can generate by filling beds instead of emptying them. So it’s not surprising that physician-led ACOs are usually more profitable than those helmed by hospitals.
Last week we attended the big healthcare IT confab HIMSS in that grand city of sin, Las Vegas. While many spoke of how HIMSS hit an all time record of over 37K attendees (an impressive number), HIMSS is still dwarfed by what is arguably the largest US-based healthcare trade show, RSNA, which had a 2011 attendance of just over 57K, (roughly 54% greater than HIMSS). Why such a radical difference you ask? As one colleague put it:
RSNA is where providers come to make money and HIMSS is where they go to lose money.
While that may be the case today, it is unlikely to be so in the future. The healthcare industry is undergoing a massive transformation that will likely take a decade to complete as we transition from a reimbursement model largely based on fee for service to one based on outcomes. Under this new model, providers will be taking on a greater portion of risk. In reward, these providers have an opportunity to receive a significantly higher net reimbursement. This transition is making for some interesting bedfellows as payers and providers join together to create new care delivery models such as Accountable Care Organizations (ACOs) and Patient Centered Medical Homes (PCMHs). These new models will be increasingly dependent on a robust HIT infrastructure to effectively measure quality, risk and performance, something that simply cannot be done effectively with the antiquated systems that are in place today in many healthcare organizations (HCOs).
This morning’s wretched jobs report tells a now-familiar tale: Employment has risen nicely in health care (a net gain of more than 340,000 jobs between May 2011 and May 2012). But almost every other sector has been flat or worse.
You might think that would mean that new-graduate nurses are having an easy time finding work. That’s still true in rural areas — but elsewhere, no.
In many U.S. cities, especially on the west coast, there’s real evidence of a nursing glut. The most recent survey conducted by the National Student Nurses’ Association found that more than 30 percent of recent graduates had failed to find jobs.
How is that possible?
While demand for nurses has been rising, it actually hasn’t risen as fast as most scholars had projected. Meanwhile, the supply of nurses has spiked unexpectedly, at both ends of the age scale: Older nurses have delayed retirement, often because the recession has thrown their spouses out of work. And people in their early twenties are earning nursing degrees at a rate not seen in decades. We’re now in the sixth year in which health-care employment has far outshone every other sector, and college students have read those tea leaves.
So what will happen next? Here are crude sketches of two possible futures:
I. THE NURSING SHORTAGE OF 2020
(This scenario draws from a talk that Vanderbilt University’s Peter Buerhaus gave two weeks ago at the U. of Maryland School of Nursing. Buerhaus still sees a shortage coming, though a less severe one than the shortage that he and two colleagues had predicted in a widely-cited 2000 paper.)
- In June 2012, the Supreme Court upholds the Affordable Care Act, and Republicans never manage to do much to weaken the law. Tens of millions of Americans gain access to insurance, and the demand for nurses rises in tandem.
- Some time around 2014, the general labor market finally recovers. There’s less desperation in the air. Sixty-year-old nurses are more likely to retire, and twenty-year-old college students who aren’t actually that interested in nursing go back to majoring in anthropology or accounting or whatever, because they’re reasonably sure they’ll find jobs.
- The millions of soon-to-retire Baby Boomers utilize Medicare at rates similar to previous cohorts of 70-year-olds.
- Changes in health care delivery mean that nurses and nurse practitioners are heavily deployed to provide primary care and to coordinate patients’ services.
II. THE NURSING GLUT OF 2020
- In June, the Supreme Court strikes down the ACA’s insurance mandate. Mitt Romney wins the 2012 election and pushes his health proposals through Congress. In this scenario, at least 45 million fewer people have health insurance than would have been the case with an intact ACA.
- The EU zone goes to hell, and the ensuing financial crisis means that the U.S. labor market stays miserable for years. College students continue to pour into health care fields, because that’s the one sector with better-than-zero growth.
- The millions of soon-to-retire Baby Boomers utilize Medicare at significantly lower rates than previous cohorts of 70-year-olds. (Unlike the other items on this list, this one is good news.)
- Changes in health care delivery don’t lead to a relative increase in the deployment of nurses and nurse practitioners. Accountable Care Organizations use social workers and other non-nurses to coordinate patients’ care across providers.
What will actually happen? Probably something in between, of course. (Or maybe the Yellowstone volcano will erupt and this will all be moot.)
We had better hope that it is something close to halfway in between. Both shortages and gluts are bad for patients and bad for the nursing profession. Nursing shortages, because patients are even more likely than usual to face understaffed units and overstretched nurses. Nursing gluts, because nurses are so afraid of unemployment that they don’t speak up about problems on their units.
David Glenn is a student at the University of Maryland School of Nursing and author of the blog, Notes on Nursing, where this post originally appeared.
As Patient Centered Medical Homes and Accountable Care Organizations form, the lines between professional and hospital practice become increasingly murky.
CMS has long required that hospital and professional records be separable, so that in the case of audits or subpoenas, it is clear who recorded what.
Today, the BIDMC ACO continues to expand into the community, adding owned hospitals, affiliated hospitals, owned practices, and affiliated practices.
Our strategy to date has been to use our home-built inpatient and ambulatory systems at the academic medical center, Meditech in the community hospitals, and eClinicalWorks in private ambulatory practices which are part of our ACO.
We share data among these applications via private and public HIE transactions – viewing, pushing, and pulling.
The challenge with emerging ACOs is that professionals are likely to work in a variety of locations, each of which may have different IT systems and each of which serves as a separate steward of the medical record from a CMS point of view.
Our clinicians are asking the interesting question – can I use a single EHR for all patients I see regardless of the location I see them?
Our legal experts are studying this question.
Ezekiel Emanuel and Jeffrey Liebman, a regular contributor to the New York Times and professor of public policy at Harvard, respectively, say health insurers will disappear by 2020.
In their opening paragraph in a January 30 blog in the New York Times, “The End of Insurance Companies”, they assert:
“Here’s a bold prediction for the new year. By 2020, the American health insurance industry will be extinct. Insurance companies will be replaced by accountable care organizations — groups of doctors, hospitals and other health care providers who come together to provide the full range of medical care for patients.”
They presume this development will leave no room for insurers.
They continue, “A new system is on its way, one that will make insurance companies unnecessary.” The new system, they confidently predict, will consist of accountable care organizations, made up of collaborating hospitals and doctors. ACOs will offer bundled payments. Fee-for-service payments will cease to exist.
ACOs, the two Obamanites imply, will sprout, flourish, and metastasize across the land from sea to shining sea.
Their prediction may be bold, but I believe it is wrong.
Two years ago, I wrote a piece in HBR called “Turning Doctors into Leaders,” which began with the sentence “The problem with health care is people like me” — that is, physicians who had been trained in an era when excellence in medicine was defined by what you did as an individual. In the short period since, the concept that medicine is actually a team sport has become increasingly accepted. Because of medical progress, there is too much to know, too much to do, and too many people involved to give patients excellent care, unless we get better at working in teams. A lot better.
Sounds good — but it’s a lot easier to write or talk about than to do. In fact, organization and collaboration are unnatural acts in much of medicine, where payment is still fee-for-service and the culture of individualism still dominates. Progress is being made — more in some regions and at some delivery systems than others. In this post, I will assess that progress by giving grades in various key functional areas akin to those that sportswriters are currently giving baseball teams as they get ready to break spring training. Like those sportswriters, I will try to blend optimism and realism.
Ability to put a team on the field — C. The payment system actually is changing, and ambitious pilots like Medicare’s Accountable Care Organization contracts are underway. In these new contracts, providers share heavily in savings and losses. And, as a provider, I can tell you that we really hate to lose (i.e., bear financial losses for care we have given).
When my co-founder Mat Kendall and I launched Aledade last June, I wrote that our mission was simple: empowering doctors on the front lines of medicine to put them back in control of health care—and rewarding them for the unique value they create. Today, a few days shy of our first birthday, we are announcing that we have raised $30 million in a funding round led by ARCH Venture Partners, and including our Series A funding partners at Venrock. This investment is a testament to the growing demand for our technology-enabled services, and to the rapid progress we have made in creating a platform for doctors to manage the new value-based healthcare economy. But most importantly, it’s a commitment to long-term thinking.
First, we have tapped into a huge unmet need and a growing demand for our healthcare technology services. We hand-picked and signed up 26 practices within weeks of starting the company, and have now established unique partnerships with over 100 primary care practices in 9 states.
Later this month – perhaps as early as this week – the Center for Medicare and Medicaid Services (CMS) is poised to release a proposed rule to update to the Medicare Shared Savings Program (MSSP). MSSP is the national program which allows providers to create ACOs, and it is the program under which Aledade ACOs operate. This will be the first update to the program in three years, and we expect there will be a great deal to unwrap once the rule is public (we also acknowledge that we are among the few who await publications of CMS rules with the anticipation of children on Christmas morning). I’m sure we’ll spend the day of the release tweeting our initial reactions — be sure to follow @Farzad_MD, @Travis_Broome, and @Aledade_ACO for those updates.
The new rule will contain a lot to unpack; but we believe that the decisions that CMS makes in 4 key areas will play a large role in whether participation in the program continues to be robust and whether the program succeeds in being the flag-bearer for new payment models.
Man looks into the Abyss, and there’s nothin’ staring back at him. At that moment, man finds his character, and that’s what keeps him out of the Abyss. – Lou Mannheim (Hal Holbrook) in the movie “Wall Street”
We hear reform ideas all the time: primary care physicians need to work at the top of license, physicians need to work in teams, healthcare must deliver top-notch customer service, the focus needs to be on creating strong physician/patient relationships, and physicians need to be paid for delivering value.
The question then becomes: how does the healthcare industry implement such ideas?
I believe it would be smart to apply the lessons from other industries.
Specifically, the financial services industry.Continue reading…
A number of pundits are citing the systemic failure of ACOs, after additional Pioneer ACOs announced withdrawal from the program – Where do you weigh in on the prognosis for Medicare and Commercial ACOs over the next several years?”
Peter R. Kongstvedt
Whoever thought that by themselves, ACOs would successfully address the problem(s) of [cost] [care coordination] [outcomes] [scurvy] [Sonny Crockett’s mullet in Miami Vice Season 4]? The entire history of managed health care is a long parade of innovations that were going to be “the answer” to at least the first four choices above (Vitamin C can cure #5 but sadly there is no cure for #6). Highly praised by pundits who jump in front of the parade and declare themselves to be leaders, each ends up having a place, but only a place, in addressing our problematic health system.
The reasons that each new innovative “fix” end up helping a little but not occupying the center vary, but the one thing they all have in common is that the new thing must still compete with the old thing, and the old thing is there because we want it there, or at least some of us do. The old thing in the case of ACOs is the existing payment system in Medicare and by extension, our healthcare system overall because for all the organizational requirements, ACOs are a payment methodology.