With only a quarter of early ACOs producing savings sufficient to share in them and uncertainty over how quickly the industry will transition to value-based reimbursement, many hospital leaders have been reluctant to make the investments required for success under value-based care.
However, tremendous clinical and financial gains may be in store for organizations that don’t delay the transition from fee-for-service. For example, in two-and-a-half years, a clinically-integrated, 1000-member, Independent Physician Association (IPA) now ranks among the most successful ACOs in the country. Since sponsoring their own MSSP ACO, the IPA has produced the following results:
- Year 1: Saved nearly $14 million and achieved perfect scores on reported quality measures;
- Year 2: Saved $11 million in spite of a 15 percent reduction in the per member per month (PMPM) cost target, which dropped from $9,300 to $7,900;
- Consistently achieved quality scores above the 85th percentile.
How They Did It
The IPA didn’t achieve success overnight. Though the association performed well for more than 20 years, it wasn’t until seven years ago that they emphasized building population health management capabilities and a clinical integration platform. During this time, they:
- achieved consensus on 167 evidence-based protocols; and
- gained experience with pay-for-performance (P4P) contracting opportunities that ultimately led to a 600-percent increase in the association’s financial reserves.
Today, the IPA has 50 contracts with both CMS and commercial payers covering more than 100,000 lives, much of that in P4P/shared savings arrangements.
The Three Levers for Success
Three levers, particularly in the early years, drove the IPA’s success under value-based reimbursement.
- Select the right physician partners out of the gate. Expand your selection criteria beyond board certification and malpractice experience to place priority on providers who:
• Are high-quality, low-cost;
• Will be engaged advocates for performance measurement, and enhancement tied to financial rewards and losses;
• Have certain technical capabilities in place (i.e. an EHR, participation in electronic health information exchange, transition and care management programs, etc.); and
• Are collaborative, routinely search for gaps in care, and utilize data to advise clinical decision-making.
- Empower physician leaders. Physician leadership goes beyond governance and administrative oversight. It requires a physician-to-physician approach in a more collaborative and informal setting. Physician leaders must:
• Be dedicated to improving the network;
• Be willing to spend extra time reviewing and explaining utilization, quality and cost data to their physician counterparts;
• Pilot new programs and openly share best practices;
• Lead by example and generate buy-in among their peers.To be effective, leaders must:
• Be equipped with both claims-based and clinical data on individual and aggregate patient and provider performance; and
• Have the credibility and authority to impose corrective actions.
- Have the money conversation upfront. It takes years to transition your business model from volume to value. Determine in advance:
• Where funds for the initial start-up and ongoing development of the organization will come from;
• What the anticipated return on investment is; and
• If physicians will be required to contribute monies to help “fund” the enterprise.You also should consider:
• If the leadership’s sweat equity will be recognized and compensated upfront, when P4V bonuses are earned, or not at all.
• How you will identify, measure, and reward both primary care and specialist physicians’ individual contributions to the organization’s earned bonuses.
• How the hospital will recoup the initial cash outlay.
• What equitable and objective incentive distribution method you will use when gains result from shared savings.The time to invest in clinical integration capabilities is before external pressures force your hand. The goal is to slowly and strategically transition your fee-for-service business to value/ risk on your own terms and at a pace your organization can handle.
For more information, contact Travis Ansel, Director, at TAnsel@HSGadvisors.com or (502) 814-1182.