The National Accountable Care Organization CongressLos Angeles, CaliforniaOctober 26, 2010

IMPLEMENTING ACCOUNTABLE CARE ORGANIZATIONS

Stephen M. Shortell, Ph.D.Blue Cross of California Distinguished Professor of

Health Policy and ManagementDean, School of Public Health

University of California-Berkeley

Some Key Questions

• Can accountable care organizations become affordable care organizations?

• How fast can payment move away from fee-for-service? How quickly can the tipping point be reached?

• How quickly can physicians and other providers develop the capabilities needed to manage risk?

Some Key Questions(cont’d)

• Can hospitals and physicians “play nice” for mutual gain?

• Can sufficient clarity be achieved on accountable to whom? For what? And how?

• Will insurers provide sufficient incentives for consumers/patients to choose cost-effective ACOs?

ACCOUNTABILITYPerformance Measurement

High performing ACO’s That

Improve Value

INCENTIVESResults-Based

Payment

CAPABILITIESEHR Functionality Practice Redesign

Co-evolution of payment and organizational form/capabilities

“the chicken and the egg”

Key Idea #1

Ability to Respond

Payment FormACOs

IDS MSGP PHO IPA Virtual

Full Capitation

Partial Capitation

Episode of Illness

Bundled Payment

Fee-For-Service

Risk-Reward Relationship

Qualification Levels

Level 1

Level 2

Level 3

Level 1 – Little or No Formal Risk. Largely Still Fee-For Service, but With Shared

Savings if Quality Care Can Be Delivered Below Spending Target

Criteria• Legal Practice Entity• Report Basic Set Performance

Measures• Sufficient # of Primary Care Physicians

Level 2 – More Use of Bundled Payments and Other At-Risk Payments. But Also

Can Earn Greater Rewards

Criteria• Above Plus a More Comprehensive Set

of Performance Measures• Specific Standards for Financial

Reporting and Cash Reserves

Level 3 – Partial and Full Capitation Payment Models. Greatest Risk but Also

Greatest Rewards

Criteria• Above Plus Publicly Reported

Comprehensive Set of Performance Measures Drawn From Electronic Health Records

• Meet More Stringent Standards for Financial Reporting and Required to Hold Larger Cash Reserves

Changing Payment Changes Relationships Among Key Players—

From Transactional to RelationalTRANSACTIONAL RELATIONALIOM REDESIGN

CHALLENGE

Redesign Care ProcessSeparation of office practices from hospital practices; ad-hoc committee work on quality improvement processes

Protocols and pathways established for entire episode of care, embracing inpatient and ambulatory care; disease management teams work seamlessly with primary care physicians and hospital staff

Effective use of Information technology(IT) (electronic health records and the like)

Performance and outcome measurement

Hospitals and physicians make independent decisions; work with independent vendors

Coordinated IT strategy established after redesigning patient care workflow; work with common vendor

Largely ad hoc, accreditation-oriented, separation of hospital indicators from ambulatoryindicators

Integrative scorecard; set of indicators used for quality improvement and external reporting

Source: Shortell SM et al. “Achieving the Vision: Structural Change.” In Crosson FJ & Tollen LA. Partners in Health: How Physicians and Hospitals Can Be Accountable Together. San Francisco: Jossey-Bass. 2010, page 51

Create a system of learning

Key Idea #2

No “Secret Sauce” But Here Are The Nutritional Elements

• EHR Functionality

• Practice Redesign

• Systems Engineering Tools• Statistical Process Control• PDSA Cycles• Quality Functional Deployment• Lean Production

Nutritional Elements

• Teams

• Leadership

• Culture

Aligned payment incentives drives all. Puts everyone “on the same page”.

Strong Ties Among All Entities

Source: D.R. Rittenhouse, et al. “Improving Chronic Illness Care: Findings from a National Study of Care Management Processes in Large Physician Practices,” Medical Care Research and Review, June 2010, 67(3):301-320.

“Twinning,” i.e., organizational mentoring

Key Idea #3Accelerated Learning

How might “twinning” work?

• One organization or group of organizations agrees to provide technical assistance to others in non- competing markets or geographic areas

• Kaiser-Permanente does this within and across their regions as do many integrated delivery systems for their own members. Idea is to “externalize” such initiatives.

How might “twinning” work?(cont’d)

• Electronic record implementation, practice redesign, leadership development, change management, etc.

• Advantage of “rolling” incentives• Bottom line Need to scale up and

quickly spread throughout the United States.

ACO implementation will be a “heavy lift”

Remember the Mike Ditka challenge:“ I am going to give the Cowboys my playbook. They will know what play we are going to run on every down, and I dare them to stop us. Because it’s all in the execution, in the blocking and tackling. And we will block and tackle better than them!”

The degree of success of ACO’s will also be determined in the trenches.

Thank You

IMPLEMENTING ACCOUNTABLE CARE ORGANIZATIONSSlide Number 2Slide Number 3Slide Number 4Slide Number 5Slide Number 6Qualification LevelsLevel 1 – Little or No Formal Risk. Largely Still Fee-For Service, but With Shared Savings if Quality Care Can Be Delivered Below Spending Target�Level 2 – More Use of Bundled Payments and Other At-Risk Payments. But Also Can Earn Greater Rewards�Level 3 – Partial and Full Capitation Payment Models. Greatest Risk but Also Greatest Rewards�Changing Payment Changes Relationships Among Key Players—�From Transactional to Relational�Slide Number 12Slide Number 13Slide Number 14Slide Number 15Slide Number 16Slide Number 17Slide Number 18Slide Number 19Slide Number 20Slide Number 21