CEO First Round

Presenters:
Dave Anderson, BDC Advisors

Larry Tubb, Senior Vice President, System Planning, Cook Children’s Health Care System

CHCA began the first of a series of conference calls highlighting children’s hospitals’ network structures and payment schemes in the evolving ACO, post-reform environment. Dave Anderson from BDC advisors introduced the call with an overview of the drivers and current definitions of the ACO environment. Larry Tubb from Cook Children’s described his organization’s aggressive movements to capture the best “learnings” for population health.

Dave Anderson—Overview of the Current ACO Environment 

With recent political haggling over the affordable care act, the insurance side seems to be up in the air. However, there seems to be good bipartisan support for the provider side. Providers currently have a lot of enthusiasm about the goals of value based and accountable care. The private payers now seem to be getting involved. There is a lot happening; let’s evaluate the drivers:

1.)    Prolonged recession draws down available funds;

2.)    Continuing consolidation of commercial payers with government’s role expanding;

3.)    Change in the physician marketplace including increases in employment models and physician shortages;

4.)    Health systems consolidating and more mergers possibly on the horizon;

5.)    Desire to decrease the number of uninsured, and

6.)    Belief in goals of accountable care, desire to better manage the health of a population.

Don Berwick, head of CMS, indicated the enemy is fragmentation and therefore strong structures of care are necessary. He says both institutional reform and payment reform are needed in tandem. Payment reform in the 1990’s failed due to a lack of institutional reform.

Now, let’s analyze the array of value based payments. The goal is to change incentives to improve care, not merely focus on activities.

1.)    Shared shavings: if achieve or exceed target, providers share in the savings gains;

2.)    Pay for performance: if achieve cost or quality goals, provider receives a bonus; and

3.)    Bundled payments: condition specific or membership-based capitation for a defined population. (Massachusetts has moved bundled payments to the next level; the entire state may be moving to capitation.)

Health systems cannot jump into new payment schemes all at once. A path of institutional change must be taken to get there. The focus must be on creating a child-centric (not patient centric) model with all resources devoted to the right care at the right place at the right time.

Defining an ACO:

CMS ACO definition: an organization of health care providers that are responsible for quality and cost of care of those assigned to them from their FFS populations.

Global ACO: accountable for all care for a population

Focused ACO: accountable for all care for certain conditions or certain procedures for a specified period of time

There is an easy self test to determine if your organization is an ACO. Do you consider an ER admission a good thing for your hospital or an ambulatory sentinel event or failure to provide the right care at the right place at the right time?

There are pitfalls to ACO and you have to be careful not to fall into the crevasse—resources are not controllable and incentives are different for each entity.

In the future, the focus will continue to be on quality and a bundled payment approach.

Larry Tubb, Cook Children’s Health Care

At Cook Children’s about 50 percent of the referral base comes from a freestanding, self-governing 280 physician group practice comprised of about 90 primary care physicians and the balance of specialists. Cook Children’s Medicaid HMO has 90,000 members.

What’s different for Cook Children’s from six months ago? We now have clearer definitions and parameters around ACOs.  Other organizations have provided clarity on their agendas and positions regarding ACOs and potential parameters for clinical integration. Regulators payors and providers are interdependent in this environment. Understanding positions enables clarity in the conversations. It is a learning environment and we are all evolving.

What is Cook Children’s doing?

1.)    Meeting with physicians, nurses and others to simply learn as well as defining a common language;

2.)    Exploring our capacity and options (e.g. potential shortfall in numbers of peds specialits);

3.)    Exploring gaps in our integrated delivery system in terms of becoming and ACO (e.g. what’s missing and where are we ACO capable), and

4.)    Conducting strategic planning, particularly with our governance, on how to collaborate with others in the marketplace and provide for the ability to move forward with strategic partnerships.

What’s our relationship with the external environment?

• More CEO to CEO exploration and conversations with adult providers (either as warning shots or collaboration opportunities);
• Seeing consolidation in the adult marketplace with adult providers buying large physician groups;
• Pro-active discussions with the state – asking them about their most serious pediatric issue and developing approaches to bring back to them—let us solve it as a pilot, then use the model. Within this endeavor, we are now exploring partnering with other provider based managed care Medicaid organizations to provide care for the SSI populations. The state is now taking this idea to the federal level as a potential demonstration project.

What are the potential dangers going forward?

1.)    Organizations must not assume that a financial intermediary structure for risk is the only option going forward. Other options such as direct contracting or subcontracting with adult providers as the pediatric provider of choice are also viable.

2.)    Health care is the provision of medical care, but the absence of health is the precursor. We want to preserve health outside of the medical care model, e.g. addressing obesity. When addressing real health reform, the organization must move from a patient centric model to a kid-centric model. We also want to reach outside of our institutions into the communities for prevention and education.

What are the basic infrastructure requirements?

1.)    Network development and understanding institutional capabilities

2.)    Ability to make tough institutional decisions

3.)    Understanding customer decisions

4.)    Understanding tradeoffs and costs; currently lacking information (Medicaid health plans might have a better understanding)

5.)    Systems that can project costs and define plans will be well position for the future.

Medical care is about rescuing people and putting them in the hospital. Don’t miss the current opportunity to go upstream. Let’s reverse the dollars from the current spend of three to five percent on prevention and 97 percent on care. We must reinvest in the community and change the game.

Questions from audience:

Q: (for Larry) How did you get physician alignment at Cook Children’s?

A: We get 50 percent of our referral base from the freestanding physician group and 30-40 percent from private pediatricians or family doctors. We had challenges in getting alignment in this mixed community model. Our solution was to make the doctors part of our governance structure. They represent 40 percent of the governance group and provide oversight and protection of the entire health system. They can’t advance their own agenda. It took two to three years but there was no other way to do it. Our docs aren’t just stakeholders—they are part of who we are.

We are currently looking at value based incentives for physicians. Should we employ more and who? How do we approach others outside of our network? We are looking at various integration strategies.

Q: (for Larry) Do you have good metrics to determine true costs?

A: We can pull some costs, but it’s not perfect. Our best metrics are around specific conditions such as asthma. We can compare the cost of the visit in the ER, clinic, private practice and home visit. Even Medicaid HMOs don’t have perfect access to these metrics but can usually analyze a subset of the population.

Editor’s Note: The March ACO call this past Thursday featured Stephen Peiser, Associate Vice President of Contracting for Children’s Hospital Los Angeles. Stephen discussed the impact of the ACO environment in LA and the hospital’s multi-pronged approach. We will provide notes and a link to the podcast in the next several weeks.

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