“But what should I be doing NOW?” Several CEOs have asked us that question, as they struggle with how to make an effective transition from a market that incents volume to one that incents quality and efficiency. We can’t stress enough the importance of preparing NOW for the new incentive structure. Those that aren’t are losing ground to their competitors.

From HSG’s knowledge of ACOs and extensive experience in the industry, we’ve defined six key strategies to start IMMEDIATELY. They will help you successfully transition to an ACO.

1.  Educate Your Physicians
The current environment threatens many physicians. They do not understand all of the factors in healthcare reform, and many find the ACO concept foreign. You should help them better understand the concept, the behavior required, the measures that will be used, and the incentive structure. This baseline of knowledge will be important as you work to develop physician partners.

2.  Engage Your Physician Base Through a Meaningful Governance Structure
You don’t need an ACO assessment to know physician leadership and involvement will be the key to success. Develop a steering committee for your ACO efforts, and ask your physician leaders, both employed and independent, to take on a leadership role within that committee. The hospital doesn’t have to have an ACO plan before engaging its physicians; rather the hospital and its physicians should work together through this committee to learn about the model, and address the issues that will lead to success. We have seen hospitals fail to do this, planning in isolation from the medical staff, resulting in a great deal of mistrust from the physicians.

3.  Align with the Primary Care  Physicians in Your Market
For your ACO to be successful, the primary care physicians in the market must a) be participating in your ACO, and b) successfully manage care within your ACO. Too many hospitals are focusing on how they will get to the “manage care” part without getting the primary care physicians engaged and aligned with their ACO. Independent PCPs are at risk to be courted by competitors, and any success there will lock your ACO out of that volume. Defining an alignment strategy for PCPs, and then engaging them in care management, and such tasks as the development of a patient-centered medical home model in your market are keys to ACO success.

4.  Evaluate and Address Your Information Technology Gaps
Information technology will be the driver of information that allows your physicians to be successful in changing the way care is delivered. An inventory of your physician staff practices must be done to determine what IT systems exist for practice management and electronic medical records within the practice. For those without either of these systems, a plan for helping them acquire each will be necessary. In addition, a plan to make sure these systems will interface with each other so that information can be shared across practices will need to be implemented.

5.  Change Specialist Incentives
Specialists currently live in a fee-for-service world that promotes volume over quality and cost efficiency. While this fee-for-service world will continue to exist, a specialist’s behavior can be changed through the use of co-management deals or other incentives that promote quality and efficiency, rather than volume.

6.  Engage Partner(s) to Fill in Gaps in ACO Competencies
To obtain core competencies, hospitals will have to develop relationships on one, and possibly two levels. All hospitals will have to engage an insurance partner who has the claims capabilities and actuarial expertise, as well as disease and utilization management capabilities. In addition, non-tertiary hospitals will need to identify a tertiary partner for their referrals.  Both of these partners are a potential source of additional capital in ACO development as well.

Closing Thoughts
Through these steps, HSG can help you start tackling the challenge of transitioning to an ACO immediately. Too many consultants, lawyers, and anyone else with a bit of knowledge on the subject have an “80-point checklist” or “comprehensive readiness survey” along with a six-month process for implementing either before doing anything that gets a hospital closer to ACO development. Hospitals waiting until the end of a lengthy assessment process, or who pour over 80 points of data for 6 months, are losing ground to competitors who are addressing the key elements of transitioning to an Value-Based Care Organization now.

David W. Miller

Founder and Chairman

Travis Ansel

Chief Executive Officer and Managing Director, Strategy