Sharp Healthcare has completed its first year of operating its Pioneer Accountable Care Organization (ACO).
According to the Sharp spokesperson, “the Pioneer ACO experienced a break-even for year one. Having no financial loss, and having no gain.”
Having looked at several Pioneer ACOs operating at this time – some successfully, others not meeting their year one goals and objectives – I would like to congratulate Sharp Healthcare on the progress it made launching its Pioneer ACO and establishing much of the organizational infrastructure needed to operate the full 3 years of funding and hit a home run in meeting the federal Centers for Medicare and Medicaid Services’ (CMS) triple-aim goals of (a) improving medical care; (2) improving the patient experience with its care system; and (3) lowering the costs of care provided.
In spite of not meeting its financial objectives for its first year of operation, Sharp’s Pioneer ACO has set the course; defined the infrastructure blueprint, and organized the extended-care team to manage the highest risk, most complex Medicare patients.
In early 2012, CMS selected 32 high performing hospitals and large medical groups in 18 states to serve as Pioneer ACOs. This grouping, according to CMS, offered the best hope of implementing accountable care, with the lofty goal of revolutionizing the health system by paying doctors and hospitals for quality rather than volume of services. Pioneer organizations would be offered a bonus for giving patients high quality care at a reduced cost. If an organization failed to hit certain quality targets or did not manage to reduce the cost of care, they would be dinged accordingly.
CMS has reported some success with the Pioneer ACO initiative. The 32 Pioneers generated a gross savings of $87.6 million in 2012. However, only 13 of the Pioneers actually saved enough money to share those savings with Medicare, despite having invested in the programs and personnel required to significantly improve quality care services provided by ACO beneficiaries. Disappointingly, two Pioneers ended the first year of operations owing the CMS program approximately $4 million.
The important news is that CMS reported that all of the 32 Pioneers succeeded in improving quality and performed better than fee-for-service Medicare in a total of 15 core measures of quality. One senior CMS administrator added that, compared to not participating Medicare program practitioners, the Pioneers were successful in lowering readmission rates, improving blood pressure control, and improving cholesterol control for diabetes patients. Another administrator cautioned that, “going forward, I think we should temper our expectations about how much money we’re actually going to save through ACOs.” He added that ACOs are basically a transitional “hybrid model of service delivery” that preserves the Medicare fee-for-service system and only applies to a portion of the patients that hospitals treat.
The Pioneer ACO does have an ongoing challenge to lower the costs of medical services, beginning with year one of operation, and continuing through the 3-year CMS funding cycle. The reason for this is that these operations must totally transform their delivery systems to establish dramatically new core values; form new governance alliances with members of the medical staff; and create new alliances with external providers for enhancing admissions, discharges and, if needed, readmissions to the hospital. This requires buy-in from the entire extended care team of physicians, nurses, behavioral staff, social service personnel, health educators, and pharmacists, as well as all support personnel based in inpatient facilities
Other major start up expenses include building expert ‘advance’ care teams for high risk, complex patients; establishing robust data reporting systems for sharing information among members of the care team, and facilitating patient online communications with their physicians. In addition, Pioneers must build enhanced quality assurance programs designed around patient needs and expectations while introducing the key concept of focusing on value delivered, improved outcomes, lower utilization of costly services, and responding to patient expectations for receiving the right level of care at the right place – and at the right time.
This is all complex, detail oriented, patient-intensive, and driven by commitment to a new paradigm of healthcare delivery. I congratulate Sharp Healthcare for its commitment to meaningful reform of our healthcare system. Our community supports you for taking the financial risks involved and dedicating your organization to establishing a more patient-centered and less costly health care system.
Martinez is a retired president and CEO of San Ysidro Health Center