| 23 September 2016
Dear Interested Readers,
What’s In This Week’s Letter
I hope that you will not be disappointed that this week’s letter is a little shorter than the usual letter. I have tried to give you a succinct description of my image of the optimal ACO. Last week’s letter focused on some of the barriers that the ACA has hit. In that context I think it is important to focus on what we can accomplish within the existing legislation, the ACA and MACRA.
I do admit in the letter that our experience with ACOs has been somewhat disappointing for me but that does not mean that I have lost my enthusiasm for what they could be. We still have the opportunity to capitalize on the ACO as the operating system that will deliver
Care better than we’ve seen, health better than we’ve ever known, cost we can afford…for every person, every time.
The picture in today’s header is of the Connecticut River taken between the First and Second Connecticut Lakes. The Connecticut River arises from several lakes, some numbered and some named, but all beautiful up in Coos County, the northernmost and economically poorest, but most beautiful county in New Hampshire. There are a lot moose, and trout, and a few people up there north of the Presidential Range and Franconia Notch. I spent the first three days of the week climbing over rocks in the river and enjoying the scenery.
I was surprised to see that the Trump/Pence roadside signs outnumbered the Clinton signs by about 500 to 1. I am not sure what that means and decided to focus on the fishing and the scenery instead of letting all those Trump signs upset me, but the observation does correlate with the fact that the election process seems to be moving toward a toss up. Nate Silver on the “538” website documents the chances for each candidate from the realities of polls and electoral college realities. As of last night (9/22) the odds according to Silver were 60% for a Clinton victory and 40% for a Trump win. That is not the way it looks like things are going up in Coos County. Unfortunately, if like me you fear what a Trump presidency might not accomplish or worse cause to happen, Silver’s graphs over the past few months show an oscillation back and forth that make the current spread a concern and not at all reassuring. In 2012 Silver was showing a persistent 90+ % chance of Obama winning when others thought it was a close election. Now Silver sees this as an election where the outcome is still hard to predict.
I bring up this fact because the future of healthcare is definitely connected to the outcome of the election. There will more about fishing, sports and politics at the end of the letter. I am just warning you so that you can avoid that discussion if you do not like fishing, the Red Sox, the Patriots, or Hillary.
I am encouraged that the readership of these notes continues to grow a little bit each week. I hope that you will recommend these musings to colleagues and friends. Several of the newest “Interested Readers” are not healthcare professionals but are consumers who recognize the importance of being informed about what is happening in healthcare. Please tell your friends who might be interested that they can sign up for the letter by going to strategyhealthcare.com where you will also be able to find a shortened and revised form of last week’s letter entitled “Is It Time For ACA 2.0”. It is my hope that it may serve as a good reference for you.
If I Could Have It My Way
Elliott Fisher first described the concept of the ACO in an article in Health Affairs in December 2006. He usually credits Mark McClellan who was President Bush’s CMS administrator at the time as a co creator. The two of them have hosted an annual ACO Summit in Washington for several years now. I have attended several of those conferences and have participated on some of the panels. These events are huge and the numbers of people coming attest to something that you probably know. Despite concerns about the ACA and ACOs, there is a growing number of ACOs in various forms. As of January 2016 there are over 800 ACOs with more than one in every state, but there is huge variation in form and execution of an idea that looked simple at the start.
Since 2011 the number of people getting their care from a CMS, Medicaid or Commercial ACO has grown from zero to over 28 million. That means that close to 10% of Americans get their care from an organization that they may not understand. I would wager that most physicians could not write more than a few paragraphs about what an ACO is, and that many do not really know much at all about the pros and cons of the idea. The current level of confusion actually represents improvement because before 2011 a common joke among healthcare policy wonks was that ACOs were like unicorns: everyone had heard about ACOs, but no one had ever seen one.
Given the current state of the variation in ACOs and the recent publication of the fact that Dartmouth, the home institution of Fisher is withdrawing from Medicare ACOs, it may be informative to go back to Fisher’s original article as we try to think about what has happened to the idea over the past ten years. Here is the abstract from that original paper.
Many current policies and approaches to performance measurement and payment reform focus on individual providers; they risk reinforcing the fragmented care and lack of coordination experienced by patients with serious illness. In this paper we show that Medicare beneficiaries receive most of their care from relatively coherent local delivery systems comprising physicians and the hospitals where they work or admit their patients. Efforts to create accountable care organizations at this level—the extended hospital medical staff—deserve consideration as a potential means of improving the quality and lowering the cost of care.
I bolded the type that introduced the term “accountable care organizations”. If you have ever heard Fisher speak, you probably heard him say that he was looking for something that had a little more pizazz to call the concept than “ACO”. I think that he was worried about introducing another acronym that would become a “four letter” word that would elicit the sort of negative emotions that “HMO” could engender from both patients and providers by the end of the nineties. “HMO” wasn’t really a four letter word but many patients like the one depicted by Helen Hunt in the movie “As Good As It Gets” used plenty of four letter words to describe their feelings about their HMO. If you clicked on the link before “As Good As it Gets” you could have read a more responsible analysis that quotes from a paper by Enthoven and Singer:
HMOs are not helpless victims of managed care backlash. Rather, at times, they seem to be their own worst enemies.... Some health plans have been insensitive and unresponsive to consumers and have treated employers instead as their primary customer.... Health plans should involve consumers in a process of continuous quality improvement.... Many plans have done a poor job of recognizing and responding to consumers' and patients' concerns by failing to provide innovative products with attributes that are desirable to consumers.
By the end of the “HMO” era there were at least 70 million people with HMO insurance products and many of them were either concerned or outright unhappy. Even now there are hundreds of “HMOs” with many more patients than are in ACOs. Despite the anger they often precipitated, they persist even in the age when PPOs are more popular.
I can speak directly to the general impact by the end of the nineties of the public’s dissatisfaction with HMOs. Harvard Pilgrim Health Care was and still is one of the most virtuous and innovative providers of HMO products. When Harvard Vanguard left Harvard Pilgrim in 1998 we had more than 400,000 patients with more than 90% of them covered by some variation of a risk based HMO “product”. Already there was variation that was most obvious in self insured accounts. After the “collapse” of HMOs and Harvard Pilgrim’s near death experience, we lost more than 100,000 HMO patients and by 2008, when I assumed the responsibility of being the CEO, fewer than 40% of our patients were in any type of HMO product with risk.
I have described the period between 2000 and 2008 for Harvard Vanguard and Atrius Health as the reverse of today’s volume to value migration. We were moving from value to volume! Our fee for service skills were so limited in 2000, when Ken Paulus was hired as CEO, that we considered FFS to mean “free for service”. Just as today organizations are scrambling to develop the skills of “population health” and the infrastructure to “accept risk based contracts”, we were scrambling to learn how to effectively generate revenue from procedures, bring imaging and surgical procedures “in house” and learn how to manage the “revenue cycle”. It did not take us long to learn how to get a “clean bill” out the door for payment without errors so that we could be paid quickly. To my great sorrow we dismantled much of our managed care infrastructure. The focus shifted from improving quality and lowering the total cost of care in favor of pursuing more encounters delivered with “enhanced fee schedules”. I have empathy for organizations that now claim that they are having a hard time understanding how to move from volume to value. I also know that just as we did what we needed to do to survive, if they really care about their practices and institutions, they will figure it out. It is amazing what you can accomplish if you look into the abyss of failure and realize that the only viable option is changing to survive.
I first heard Elliott Fisher speak in 2007. Change was in the air. Massachusetts had passed Chapter 58 (Romneycare) in 2006. Even if Fisher would not say it, his ACO idea sounded a lot like HMO 2.0 to me and I was all for that. I had a simplistic view of what had happened to HMOs. In my mind the HMO was the imperfect first attempt to find the answer to Dr. Ebert’s request for a “conceptual framework and operating system that will provide optimally for the health needs of the population.”
Even though I have reprinted the quote dozens of times, as we think about ACOs, the whole quote from 1965 bears repeating:
The existing deficiencies in health care cannot be corrected simply by supplying more personnel, more facilities and more money. These problems can only be solved by organizing the personnel, facilities and financing into a conceptual framework and operating system that will provide optimally for the health needs of the population.
In 2007 I was excited by Fisher’s idea. To me it sounded like a second shot at the dream. In my simple view I figured that HMOs, including Dr. Ebert’s experiment at Harvard Community Health Plan had really not failed as a concept. The idea had just been co opted by people interested in making a lot of money. Egregious errors had occurred but the basic idea was still viable. We just needed to figure out what had gone wrong and produce Managed Care 2.0. Calling Managed Care 2.0 an ACO was a good idea since the term HMO was tainted. I tried to explain to myself how things had gone wrong. A short incomplete list of the reasons would include.
- The focus had shifted from the transformation of care delivery to finance. Berwick would call it greed.
- “Pure” organizations like HCHP and Kaiser had the model co opted and undermined by IPAs and all sorts of other organizations that were focused on profits and not on improving care. They were willing to deny necessary care to be profitable.
- “Experience rating”, “sole sourcing care”, “cherry picking”, and other “externalities” in the market had created a difficult business environment.
- Patients and employers wanted “choice” over tightly managed systems and were willing to pay for it.
- We did not really have tools for continuous improvement or to understand our populations. Our competencies did not measure up to the challenge.
In my “what part of the problem are we” view of healthcare we had failed because our efforts to “capture market share”, “grow the network”, and satisfy the demands of purchasers for “choice” had diverted our attention from coordinating care, improving quality, and focusing on the infrastructure to manage disease and engage our patients with outreach that improved their health. We had lost our way. Instead of showing the world a better way, the status quo had taken our way, defiled it, and used it to their advantage.
When I read what Fisher was suggesting and heard him speak I was thrilled. I was ready for what he was suggesting. I imagined that with our new tools like software programs to assess populations and new skills in continuous improvement like Lean we would be enabled to better understand the various populations that composed our practice. We could now do a better job of improving care while more effectively using our resources. Fisher was suggesting an operating system that was focused on collaboration and collective rewards and not on individual performance. Everything in his vision resonated with my own best experience.
In retrospect he was saying many of the same things that Don Berwick emphasized in his description of Era 3. Fisher connected the measurement and finance focus on individuals in the post HMO attempts of payment reform to the fragmentation of care. His breakthrough concept was accountability for group performance to improve care and lower the cost of care. I was thrilled.
In early 2008, when I assumed the role of CEO, only 38% of our patients were in risk products down from a peak of almost 100% in 1998. Blue Cross was offering the Alternative Quality Contract (AQC) which encouraged a refocus on many of our managed care competencies that had withered as we developed our fee for service strategies. The stars seemed to be aligned. The AQC was like a dress rehearsal for being an ACO. I envisioned the whole organization as the ACO. “ACO” was a description of how we delivered care more than a description of how we got paid. I recognize the importance of the coupling of the operating system and finance in healthcare. It is true that good care should be rewarded but the proper order is performance first and payment second. HMOs failed because finance became more important than performance for the patient. As the ACO process has evolved it sometimes feels like “deja vu all over again”. FInance has been the driver and care delivery is secondary. I believe that most organizations have thought of their ACO as a finance mechanism and not as a descriptor of how they deliver healthcare to everyone without regard to the finance mechanism.
Physicians and organizations that depend on fee for service income often complain that the care they can deliver is limited by the services that can be attached to a billing code. The proper finance of an ACO should enable care to be designed around what the patient needs in a more rational system of care rather than the revenue that can be generated by a series of billing codes. To my surprise, as the ACO process moved forward, almost no one seemed to see their total organization as an ACO. Most saw their organization as having some percent of their population in ACO contracts. I realized that for most it was just another finance mechanism like their PPO products and residual HMO contracts. The term ACO did not really make them think of transforming care. It did not describe what they were or wanted to be. It seemed that for many if they did have a focus on cost and quality, it was in some context of revenue from pay for performance schemes that were layered on top of business as usual. There focus on quality was not driven by the insight that ACOs were about a real transformation of how we delivered care. The patients who were in an “ACO” were just in another contract and a minority of the total practice.
My experience as a physician in practice observing myself and other physicians in practice has led me to the conclusion that most of the time we approach all of our patients the same way. That way is frequently driven by the financial concerns that drive how care is delivered to the majority of patients. When a practice still has most of its patients in contracts that are “volume based” FFS contracts it is hard to simultaneously care differently for a minority of patients who are in “value based” risk products. The problem is compounded by the fact that even in organizations that are receiving large amounts of “value based” performance revenue with risk based contracts that are designed to move them away from unnecessary utilization, their physicians are often compensated for “volume performance” with perhaps a little bonus added like a cherry on top for “quality.” Craig Samitt, who is now the Chief Clinical Officer of Anthem has called this “funky” finance. The organization gets compensated for value and still pays its physicians for volume. Go figure.
For ACOs to fulfill the vision that Fisher’s idea promised, the process of change must move down to the individual level. That means that we must negotiate best practices and systems of care within organizations. How we get paid as individuals must be aligned with how we are collectively compensated as practices and systems of care. Payment for accountable performance can only make sense when the organization thinks of all of its patients in terms of their accountability for quality, service and cost. Finance is secondary to the mission despite the universal misinterpretation of the famous quote by Sister Irene Kraus, “No margin, no mission.” I believe that she was emphasizing to her hospitals that they could not support their mission on philanthropy; not that they should set aside their mission until they maximized revenue. Improvements that improve quality and reduce cost will generate revenue even in a fee for service structure as ThedaCare and VIrginia Mason have nicely demonstrated. The key is to focus on improvement and not make finance the sole driver of strategy.
Shortly after my friend and former colleague Don Berwick had become the Administrator of CMS, I traveled to Washington to pay him a visit. My objective was to see if we could become involved in pilots that would be a source of revenue. His response to my query embarrassed me. He said, “Gene, your organization is already paid much more than it needs to provide excellent care. Your job is to figure out how you can give back some of the money.” He then walked me down the hall and introduced me to Rick Gilfillan who had just accepted the leadership responsibility for CMMI and the creation of the CMS ACO products. We became a Pioneer ACO not to enhance our revenue but as a mechanism for being a part of the evolution of Managed Care 2.0. I believed then and still believe today that having to work through the issues of becoming an effective ACO was the best strategy to preserve our mission into an uncertain future.
Whether the ACA survives and no matter what result the election produces, I believe that the competencies of a successful ACO as envisioned by Fisher and despite the financial decision made by Dartmouth is the best strategy for the Triple Aim and
Care better than we’ve seen, health better than we’ve ever known, cost we can afford…for every person, every time.
MACRA was passed with bipartisan support. Even as Humana, United, Aetna, Anthem and other big insurers talk about exiting the exchanges they are expending great resources to develop ACO like payment mechanisms for the future. The ACA is about trying to cover everyone. The 85% of people who were covered before the ACA still represent an enormous cost problem that employers, taxpayers and individuals who want to buy healthcare must solve. The concepts described in the reformulation of Managed Care as ACOs will continue to evolve. The number of clinicians and organizations that embrace the changes that are inevitable can only grow. The politics of resistance to the inevitable need to bring healthcare costs into line while improving quality and extending care to everyone create a noise that should not detract thoughtful providers from doing what they need to do to improve. It is a very pragmatic process of testing ideas with experiments like ACOs and then taking what we learn as a basis for refinement and further advancement, and not as a reason to abandon the effort.
Does It Get Better Than This?
Three days of fishing in glorious weather in a beautiful place with eight straight Red Sox victories and two remarkable Patriot wins in five days is a package of delight that can take your mind off of a lot of onerous and objectionable political noise. Even the stock market is up. The only cloud on my horizon is the first presidential debate on Monday and I plan to diminish the suffering from that event by sharing it with friends at a neighbor’s home.
Some would say that things look so good that they can only go down from here. That may be true, but that is when I hope for resilience. The one thing that the Brady affair has demonstrated is that as great as individual performers may be, nothing is better than teamwork. The Sox demonstrate the same reality. Things go best when everyone plays a part. No one is absolutely irreplaceable.
I have gotten over summer and I am embracing fall. Up North many of the trees are getting some color. The evenings and mornings are chillier even though the daytime temps are warm. In the fields the corn stalks are turning brown now that the harvest is over. Everywhere the hay has been cut and what is left looks like someone has mowed a huge green lawn. I hope that you will be able to get out for some exercise in great weather this weekend wherever you are. I am pretty sure that you deserve it!
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| Be well, take care of yourself, stay in touch, and don’t let anything keep you from making the choice to do the good that you can do every day,
Gene
Dr. Gene Lindsey
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