The 2013 SHSMD Annual Conference in One Word

SHSMD Annual Conference

Having spent my week at SHSMD schmoozing with the biggest gathering of healthcare strategy, planning, communications, marketing and PR professionals that the Society has ever had, the current state of our industry can be summed up in a single word:

Uncertainty

We’ve been on the cusp of major industry shifts for a few years now, but for all of the discussions and debate, no one is really sure what our industry is going to look like three years from now.

This week saw the biggest step to date in terms of actual implementation of the ACA (AKA Obamacare) and we’re still playing a guessing game to determine what its real meaning to our service mix and financial picture will really be. Obamacare applies leverage to the edges of the healthcare system, but doesn’t dictate what the care delivery system will look like or how it will work.

Continue reading

Healthcare Marketing Reform

healthcare_marketing_reformI’ve spent a lot of time recently pondering the role of marketers in a post-reform healthcare system. Healthcare is undergoing an incredible period of change. While we’re still unclear on the specifics of how things will play out, the failures of the current system that we hope to correct are well established:

  • Costs are growing out of control.
  • No accountability for the costs of delivering care.
  • No accountability for quality or outcomes.
  • The results that we get from the current investment is mediocre.
  • A lack of consistent, evidence-based, data-driven decision making.
  • Lots of waste resulting from a lack of coordination.

As marketers look to understand how we’ll adapt to reform, there’s no shortage of ideas. Some suggest that marketing will go away. Others predict that the goals of marketing will simply change. Instead of driving usage of expensive services such as cardiology and oncology, marketers would focus on driving volume to preventive and early detection services that would reduce or eliminate the overall costs of treatment. Still others suggest that, despite the changes, marketers will do pretty much of what they do today, only targeting that slice of the patient population with high-paying private insurance.

What I don’t hear is any discussion about changing how marketing gets done.

The healthcare industry is being asked (or told) to change the way that it does everything. The models of care delivery are changing, as are the payment and delivery structures.

It’s very presumptive to think that marketing will continue to work as it always has, with only a few small tweaks to what it is we’re marketing or who we’re marketing it to.

Look back at the list of issues faced by the healthcare industry. That list could just as easily have been applied to healthcare marketing:

  • We cost too much.
  • Our results are often intangible and take too long to deliver value.
  • We have no accountability to prove what tactics are working . . . and, in the absence of that data, we continue to put our resources behind strategies and channels that don’t produce results.
  • We aren’t coordinating our efforts in a way that have the maximum impact on the health consumers that we need to reach.

Certainly, this requires bold adoption of new marketing tools, both tools for reaching consumers and tools for measuring the results of our efforts.

More importantly, it’s going to require marketers to be better, faster and stronger. We’ll need to deliver more value, more quickly, for a lower investment.

It’s a bold challenge that lies ahead. Our organizations are setting up new foundations to enable the changes that they’ll go through in the coming years. Is your marketing department ready?

What Health Reform Means for the Healthcare Web

We’ve written quite a lot about health reform in its various forms including Meaningful Use, ACOs, ACA, and medical home. But a question that I received this week made me realize that I’ve never written specifically about health reform’s impact on your hospital’s online strategy.

Greater Organization Complexity

Merging, acquiring, and employing docs and the many flavors of business relationship between hospitals, clinics and insurers that are emerging under reform means that your brand is getting pretty complicated. This isn’t just a question about names and logos – your website has suddenly become the front door to a very complex and likely changing mix of doctors and services. Your job is to make it simple for every site visitor to get the information they want. I strongly recommend our webinar on using the Web to support complex organizations to dive into the topic in greater detail.

Promoting a Different Set of Services

The mix of services, where they’re promoted and who receives that promotion will be changing as changing payment models come into play. For example, primary care promises to be a central strategic offering as medical home models become the norm. Be prepared to provide better support for more service lines digitally and look to take those offerings to health consumers in new and different ways.

Increased Focus on Physicians

A new focus on employed physicians means many of you will be allowed to promote certain doctors for the first time and there’s now a strategic imperative to fill some waiting rooms! That means that you’ll be marketing physicians more than ever before.

Keep in mind, though, that marketing physicians doesn’t mean a bunch of advertising for hundreds of individual doctors. It means finding how to differentiate their practice and helping the right patients get connected to them. Most advertising should represent the organization or particular service offerings rather than physicians (see “Relationships,” below).

Wellness and Sickness

While we’ll need to help health consumers navigate the system when something’s wrong, nothing will be more profitable for our organizations in the future than keeping our patients healthy. Building digital tools and content that support good health and the management of chronic conditions will become very important. There may also be a role for digital-based communities for these areas as well.

Relationships

Some of the changes coming along could make healthcare a very transactional business. Greater use of convenient care services and physician extenders mean that the relationship that was once central to primary care – that between physician and patient – is just not going to be as central in the future.

But the goal isn’t to make the system transactional. The whole point of medical home is to provide more coordinated care across a given patient’s needs.

We therefore need to replace (or at least supplement) the relationship between patient and doctor with one between patient and health system. How do we do that? Begin by providing a single point of access to a patient’s information through a patient portal across all of their interactions with the health system – primary care, specialists, emergency department, classes, and support groups. The system should also provide all of the important health and appointment reminders to the patient in a consistent, coordinated way. That is pretty difficult without a customer relationship management system that works across secure digital channels, traditional mail and inbound and outbound call center operations.

What Won’t Reform Impact?

Looking at all of those changes together suggests that the role of the Web is going to change pretty dramatically in the coming years. Today, we’re there to build awareness and support transactions. But in the future we’re going to have a greater role to play throughout the stages of a patient’s relationship with our organization, from health consumer – proactively reaching out, building awareness, guiding them to access the system in appropriate ways, and promoting wellness as the foundation of their relationship with the health system – to patients – being their gateway to the healthcare system, central point for coordination of care, conduit to support resources from healthcare professionals and peers and their road map for better management of their health.

AHA Leadership Forum – Our World is About to Change

“Our world is about to change. Now, let’s figure out what that might look like.”

That is, in essence, what my week at the AHA Leadership Forum in San Francisco was all about. We all know that there’s a tremendous wave coming in healthcare. The recurring theme was actually “the second wave” representing the shift from pay-for-service to the new models of healthcare reimbursement that are on the horizon. And the conference focused on determining what the industry will look like in the future.

As much as we’ve discussed the changes, much of that talk has either been very conceptual or very tactical – in essence missing the forest for the trees. The various legislative efforts that have gotten this ball rolling (ARRA, ACA) are really applying leverage at the edges of the healthcare system. But they don’t do a good job describing what the core of the system will really look like when it’s all said and done, let alone what will happen as we work through the processes of transformation.

While it may add to our collective discomfort, this is fundamentally a good thing. For all the complaints of politicians trying to change a healthcare system that they do not fully understand, we should be happy that they haven’t attempted to dictate the details. They’ve set out meaningful goals specifically around the reimbursement model and then stepped out of the way to allow the healthcare system work out the details.

It’s clear that we don’t really know the details just yet – at least not all of the details. We do seem to understand where enough major challenges lie to keep us occupied for a while, however.

Continue reading

The ACA is Upheld! (Mostly)

It’s been a crazy morning as everyone waited anxiously for the ruling. In fact, CNN cycled through several versions of pre-written responses to the decision flip-flopping from “The Supreme Court has struck down the individual mandate for health care” to simply “Upheld.”

Within a few moments of the decision, the big items have become clear:

  • The individual mandate, a critical lynchpin of the legislation, was upheld as constitutional.  The key argument against the mandate held that the government cannot compel citizens to buy a product.  In a 6-3 decision, with Chief Justice Roberts joining the majority, the mandate was determined to be a tax (or, rather, the fine that individuals would be required to pay for not purchasing insurance is a tax), nothing more, which the Federal Government has the right to levy.
  • Broader questions of the constitutionality of the overall Accountable Care Act (ACA) were contingent on the fate of the individual mandate and were therefore not an issue.
  • The other key issue relating to the Federal Government’s ability to force an expansion of Medicaid.  This too was ruled constitutional, but with the caveat that states would lose only a portion of Medicaid funding. Essentially, new funding that was added along with the new eligibility requirements, rather than all of their Medicaid funding.

Surprisingly simple, really.

Continue reading

Preparing for a SCOTUS ACA Ruling

Rather than adding to the conjecture and scenario-weaving running rampant through the blogosphere in anticipation of tomorrow’s Supreme Court decision on the future of the Accountable Care Act, I thought I’d share a few worthwhile reads from other bloggers who have already covered every aspect of the health reform case.

Hopefully, that will keep you busy until we hear what the answer tomorrow and then the real analysis can begin. Of course, the Supreme Court Justices could rule that they can’t make a decision until later, and we can repeat this whole process again next year!

Meaningful Use Stage 2 Ushers In the Age of the Patient

We’ve had a few weeks to wrap our heads around the Meaningful Use Stage 2 Notice of Proposed Rulemaking (NPRM) and it’s clear that the Feds are looking to shake up the industry a bit. Why? It’s time to pursue the true objectives underlying healthcare I.T. adoption in HITECH.

Meaningful Use Stage 1 has been successful in moving the industry toward medical record adoption. The hurdles for demonstrating Meaningful Use in Stage 1 are low, but have caused organizations to begin implementing basic infrastructures – and this will turn out to be a good foundation for what’s to come. Unfortunately, Meaningful Use Stage 1 requirements have not broken the boundaries that exist between providers, hospitals and patients.

As we predicted, Meaningful Use Stage 2 seeks to give everyone involved the data they need by placing renewed focus on sharing information between providers, submitting public health data, and engaging patients and families.

The requirements around engaging patients and families have been amongst the most often deferred by provider organizations in Meaningful Use Stage 1. The NPRM clearly establishes that this goal of the HITECH Act isn’t going away and raises the bar significantly for connecting with patients and their families online.

Meaningful Use Stage 2 Criteria
The following is a summary of the Meaningful Use Stage 2 criteria for patient and family engagement (with comparison to Meaningful Use Stage 1 in parenthesis):

  • Of all patients who are discharged from the inpatient or emergency department:
    • More than 50% have their information available online within 36 hours of discharge (Stage 1 was 10% and optional)
    • More than 10% are provided patient-specific education resources identified by Certified EHR Technology (Stage 1 was optional)
    • More than 10% view, download or transmit to a third-party their information during the reporting period (New)
  • Of all unique patients seen by the eligible providers during the EHR reporting period:
    • More than 50% are provided timely online access to their health information (timely is defined as within 4 business days after the information is available) – ( Stage 1 was 10% and optional)
    • More than 10% view, download, or transmit to a third-party their health information (New)
    • A secure message was sent by more than 10% of unique patients (New)
  • For office visits:
    • Clinical summaries provided to patients for more than 50% of office visits within 24 hours (Stage 1 was within 3 days)
    • Patient-specific education resources are available for more than 10% of all office visits (Stage 1 was optional)

Continue reading

Obamacare, The Problem Child

In a series of high-stakes court battles, the Patient Protection and Affordable Care Act (PPACA) has viciously torn its way through the legal labyrinth. From a high-level procedural posture standpoint, many lower courts have heard cases involving PPACA.

U.S. District Judge Roger Vinson ruled that the individual health insurance mandate falls outside the federal authority in the Constitution, and that the provision could not be disconnected from PPACA; therefore concluding the entire Act must be struck down. In the converse, members of a three-judge panel at the District of Columbia U.S. Circuit Court of Appeals ruled 2-1 that the individual health coverage mandate is constitutional. The dissenting judge on the panel argued that the federal Anti-Injunction Act prohibits the federal courts from considering suits seeking to block implementation of new federal taxes, at least until they incur some sort of penalty. The 4th Circuit Court of Appeals agreed with that judge, dismissing two PPACA cases concerning the individual mandate, finding that the suits were barred under the Anti-Injunction Act.

The Eleventh Circuit Court of Appeals dividedly affirmed Judge Vinson’s decision in part; the panel agreed that the mandate was unconstitutional, but held that it actually could be severed from the rest of the Act, allowing the rest of PPACA to remain. The federal government declined to seek review by the Eleventh Circuit and instead petitioned for the U.S. Supreme Court to review the panel’s ruling. On November 14, 2011, the Supreme Court agreed to hear the case, and here we are today; the commencement of that hearing.

Does the problem child have a future?

Every child has a future. In this case, even if PPACA is struck down, all parties seem to agree that future healthcare reform will draw at least in part on Obamacare. However, in this case, of the four issues the Supreme Court has agreed to hear, the key issue is the constitutionality of the individual mandate.

According to a CMIO post, if the Court upholds the individual mandate it will go into effect in 2014. If they strike it down, the Court will then consider whether the mandate is severable from the remainder of the law, which will determine whether PPACA’s other provisions survive. If the Court decides that the individual mandate is “inextricably linked” to PPACA as a whole, they will likely strike down the entire Act.

One of the most frequently asked questions in regard to the individual mandate is, “What does the provision mean for those who don’t purchase healthcare?” Individuals who can but choose not to obtain qualifying health care coverage under this law will be required to pay a penalty as part of their income tax returns. In 2014, the penalty is $95 or 1% of the individual’s income, whichever is greater.

However, according to NPR, PPACA provides a vast system of subsidies to help people afford health insurance. Subsidies are available to people on a sliding scale, up to 400% of the poverty level. This year that would be a family of three with an income up to $76,360 and a family of four up to $92,050. Even then, if there’s no affordable policy available, people can be declared exempt. And most of those with insurance provided by their employer will meet the requirement automatically, so they won’t have to do anything.

Continue reading

Happy 2nd Birthday, Baby Obamacare!

Just over two years ago, President Barack Obama officially gave birth to the Patient Protection and Affordable Care Act (PPACA) – inarguably one of the most momentous healthcare laws in our country’s history. In fact, you’d be hard pressed to find a single person in America who won’t at some point in the next two years be affected by PPACA, should it be upheld. And for those of you thinking you have no idea what I’m talking about, you might be more familiar with PPACA’s alias “Obamacare.”

Advocates of PPACA define PPACA as a federal statute that will ensure all Americans have access to affordable healthcare, and ultimately improve quality of care by rewarding doctors and hospitals who meet Meaningful Use criteria. Challengers of PPACA claim it’s an act of socialism that will degrade quality of care, as the once uninsured masses flood ERs across the country causing demand to rise far more rapidly than supply.

One thing is certain: PPACA has led to an all-out war. Soldiers on both sides of this battle continue to launch politically contentious bombs at one another in the court of public opinion, seemingly oblivious to the fact that PPACA actually headed to the Supreme Court yesterday. And while these proceedings should catch the attention of all Americans (and even those abroad), members of the healthcare community should be particularly keen on how these pivotal six hours of arguments over the next few days play out.

Before anyone goes into this week’s almost certain media frenzy over the Supreme Court hearing, there’s some very basic information that can help get you up to speed on how President Obama’s baby, so-called Obamacare, has grown – from conception to birth to its second birthday.

Conception by the Senate in the privacy of the House.

Many on the right fail to realize that the first iteration of what would become the PPACA was initially passed by the House – where the Constitution requires all revenue-related bills to originate – as a modification to the Internal Revenue Code. Many on the left fail to realize that the Senate used this iteration to catapult their own healthcare reform plan by completely revising it, incorporating terms they knew were favored by the Senate Health and Finance committees. After some debate and negotiations, the Senate passed the bill on December 24, 2009.

Planning for Kiddie Care.

Once the Senate’s version of the bill got back to the House, White House Chief of Staff Rahm Emanuel argued for a scaled back bill in the face of the recently-elected Senator Scott Brown’s imminent stalling tactics. Although President Obama leaned in support of Emanuel’s proposal, he was soon convinced not to back down by House Speaker Nancy Pelosi, who dubbed Emanuel’s pared down bill idea, “Kiddie Care.”

President Obama then introduced a healthcare reform plan of his own, and over time was successful in gaining buy-in. The most viable option at that point for advocates of comprehensive reform was for the House to pass the Senate’s bill, with every intention of subsequently passing amendments to it – much like the Senate did to the House’s original version. After a considerable amount of negotiations that involved controversial concessions by President Obama, including one related to certain restrictions on federal funding of abortions, the House passed the bill on March 21, 2010.

Continue reading

Improved Health Literacy Won’t Fix Healthcare

In many of the discussions about creating empowered, engaged patients, I hear a common theme: that improving the general health literacy of Americans will largely solve the problem. It’s a view that, in hindsight, I’ve generally agreed with. If only health consumers understood the problems, challenges and tradeoffs of healthcare more fully we would stop bad behavior and when injury or illness occurred, we would make better decisions.

I have come to the conclusion that I’ve been wrong.

This idea has been percolating for a few weeks in the back of my mind after listening to a podcast debating a similar question for financial products. The always thought provoking Freakonomics podcast, an extension of the successful books of the same name, looked at the question of financial literacy as a way to prevent the next financial crisis.

We know the recent financial crisis had many causes, but at the bottom of the food chain were a lot of individual consumers who took out loans they couldn’t afford. Some of those loans couldn’t be afforded because the monthly payments were simply outside what’s reasonable for that individual’s income while others were very complex instruments in which payments ramped up dramatically over the course of the loan and, in some instances, included expensive penalties which made refinancing all but impossible.

So the argument which follows states that a consumer with greater financial literacy would have understood the intricacies of these instruments and never would have agreed to the preposterous terms of the loan. This argument appeals to my laissez-faire streak. After all, I was presented with adjustable rate mortgage options when I refinanced in that same timeframe, realized immediately that the loans were ridiculous, and rejected them outright. If we gave the consumer my level of financial literacy, then we’d have no crisis – right?

But the counter-argument recognizes the impracticability of this answer. I have an MBA with a lot of finance courses under my belt. If that’s what it takes for consumers to make bad decisions then the process is fundamentally broken.

The counter-argument states that financial products are complex. The contracts explaining them are complex. Building a base of knowledge in the general population that would allow them to work through all of that and understand the implications is far too expensive given that this is the sort of transaction that they’ll deal with only a few times in their lives.

Implications for healthcare.

Now look at healthcare. The same assumptions underlying the financial products problem certainly hold true. Healthcare is complex. Building an understanding that would allow for general good decision making in those relatively few occasions in an average consumer’s lifetime is difficult if not impossible. Certainly, it’s a very expensive undertaking and probably prohibitively so.

In the field of usability design, for both online usability and usability of real-world products, there is a general rule that you should design so consumers aren’t able to make bad decisions. In the Web world, for example, you shouldn’t allow a search form to allow for combinations of options that return no results.

Continue reading

More Insights on Meaningful Use Stage 2

As the conference room, and then the overflow room both surged beyond their capacities with HIMSS attendees looking for insights on Stage 2 of Meaningful Use, I began wondering if there would be anything for the presenters to say. Rumors of a new Notice of Proposed Rulemaking (NPRM) have been swirling for weeks with the date gradually slipping back. Checking Twitter again confirmed that nothing had yet been released this morning.

But we soon learned the NPRM was submitted this morning and will be released to the world later this week. Most importantly, our presenters were allowed to start sharing the important details.

Today’s Meaningful Use Stage 2 discussion was a joint presentation with Farzad Mostashari and Steven Posnack from ONC joined by Elizabeth Holland and Travis Broome from CMS.

The presenters all reiterated that the committees involved have all stayed the course with the intent of the legislation, Stage 1 rules and discussions to date.  And, as advertised, most of the information shared was to be expected. Still, with so many different stakeholders involved, it was good to get some confirmation about the direction they’re proposing.

The major themes (and in the time available, we weren’t able to get much more than themes) are as follows:

Streamlined Process
The regulations should be clearer and more flexible. Much of the feedback that the committees took to heart seems to have been in areas where the process didn’t fit the situation. Organizations can now implement only what they need to achieve compliance rather than installing software simply to check a box. Likewise, vendors working on modular certification won’t be required to test against criteria that do not apply to their tools.

Continue reading

Incoming! Meaningful Use Stage 2 Requirements Are Coming!

Rumor has it that HHS will be releasing Stage 2 Meaningful Use requirements this week. Why this week? The most likely reason is that the Healthcare Information Management System’s Society (HIMSS) annual conference, a collection of 25,000 or so healthcare IT professionals representing every angle of the industry, kicks off on Sunday.

What better time to drop the bomb all of us have been waiting for?

We do have some insight into what Stage 2 will look like. Indications over the past year have been that the specific things hospitals, and by proxy the vendors that serve them, are asked to do won’t change a great deal from Stage 1 to Stage 2. The thing that will change is the metrics hospitals use must demonstrate they are, in fact, meaningful.

Those metrics send a clear message, however. Not all Stage 1 criteria have been achieved equally by the physicians and hospitals that have attested, and some of the criteria were the usage of capabilities that are a stretch to consider as truly meaningful.

So look for the bar to be raised across the board, but particularly for those token items such as “implement one decision support rule.”

Expect also to see greater emphasis on some requirements that have been systematically avoided by entities achieving Meaningful Use Stage 1. A report by CSC Healthcare lists more than a dozen criteria that have been commonly deferred or exempted by Stage 1 providers. The majority of these fall into the category of sharing information including transmitting summary records at care transitions, submitting public health data and sharing information with patients such as digital copies of their health information, discharge instructions, educational materials and health reminders.

One of the key goals of the HITECH Meaningful Use process is to not only digitize healthcare information, but to break down the boundaries that exist between providers, hospitals and patients. I would be disappointed if the criteria for this type of data sharing didn’t tighten up considerably under Stage 2.

What this also means is that lots of the really exciting criteria, the pieces that start to force changes in the healthcare delivery model in the United States, won’t be coming until Stage 3. This is where we’ll start to see the requirements for patient self-management tools and other forward-looking components. I only hope we won’t be waiting another year before those criteria see the light of day.

So as HIMSS staff scramble to prepare for a shift in how they’ll be spending next week, keep an eye on your favorite social media outlets, including my Twitter account @BenAtGeo, for breaking news and insights as Stage 2 requirements are revealed and discussed.

If you’ll be at HIMSS next week, also stop and visit Geonetric at booth 1370!

How Can I Use the Web to Improve the Health of My Community?

Find out the answer to this very question in Ben Dillon’s article in the July 2011 issue of eHealthcare Strategy & Trends.

Due to health reform, hospitals are increasingly focused on wellness and are turning to the Web as a tool to promote and manage these initiatives. In Ben’s Ask the Expert article, he share examples of healthcare systems that have successfully utilized the Web to motivate, educate and build awareness of their wellness programs to promote healthy behaviors in their communities. He also addresses the benefits of turning to the Web and the future of wellness promotion.

The Last Mile – Connecting Patients into the Healthcare System

Healthcare is entering into a time of incredible change. This change comes from the need to modernize the practice of medicine, to align the interests of all of the entities involved, to create an actual coordinated system of care and, of course, to change the disastrous financial course healthcare is on.

But you knew all of that.

What you might not have realized is all the implications of these changes.

There’s lots of talk about EHR implementation spurred by meaningful use and the great potential of ACOs to change the way healthcare operates.  Much attention is paid to hospital-physician relations, physician employment, hospital mergers and clinical integration.

But where is the patient in all of this?

Patients are not just an input and output of the healthcare system — at least, not if we hope to make the changes underway meaningful.  Care organizations will need to communicate differently with patients. They’ll need to understand our current set of interactions between patient and care provider – the intermittent phone calls, office visits and the occasional mailing – aren’t the result of the way we provide care, they’re the reason the healthcare system functions (or fails to function) as it does today.  Changing care delivery requires us to change our communications.  New methods of communication are enabling the process behind new care models.

This is what patient portals are truly about.  The net goal isn’t to let patients request appointments (they can do that today) or get their lab results (which they’ll get two days later in the mail).  Organizations that are excited about this technology have that enthusiasm because they see the low-cost secure communications between the patient and the care providers are at the heart of where healthcare is going.

Look at the internet as a model.  Deploying the technology backbone, the high bandwidth connections crisscrossing the country which connected telecom providers to one another, was relatively cheap and easy.  The hard part, known as the last mile, was getting connectivity from those telecom providers to every house, office and factory.

What we have now is the last mile problem in healthcare.  Sure we have a plan to get the hospitals, doctors and insurers connected, but none of that matters until we connect every patient into the system.  That’s the role of patient portals.

That’s why it’s my pleasure to share Geonetric’s new white paper, The Future Of Healthcare Delivery, that provides a roadmap for the patient-facing technologies your hospital will need to succeed in the new world of healthcare.

ACOs – A Swing and a Miss

Proposed ACO regulations were issued at the end of March amid much fanfare.  The industry has had a few weeks to digest it, and it appears we need go back to the drawing board.

First, a Review
ACOs, or Accountable Care Organizations, were introduced as part of healthcare reform as a tool to make providers and hospitals coordinate care and reward outcomes and quality.  ACOs are a reaction to many of the biggest issues in our healthcare system: lack of communication and coordination, duplicated tests, incentive systems that reward overuse of care, and lack of follow up and unnecessary readmissions.  While ACOs will initially be put to use for the Medicare system, private insurers are eyeing the concept hungrily and are expected to follow suit once the Centers for Medicare and Medicaid (CMS) sorts out the details.

As we’ve discussed, becoming an ACO requires organizations to get their ducks in a row. Organizations preparing to go down this path are focused on developing a number of different competencies:

  • Physician Integration
  • Care Coordination
  • Cost Management
  • Information Systems Sophistication
  • Balanced Service Distribution
  • Payer Relationships/Contracts
  • Financial/Capital Capacity
  • Scale/Essentiality

A Challenging Rule to Craft
Pulling the preliminary rules together was incredibly complex mainly because of the large number of government agencies involved (CMS, OIG, FTC, DOJ and the IRS).  Certainly CMS makes sense, but the other agencies introduce some less obvious issues.
The rule needs to provide the right mix of incentives for these organizations to operate. But it also must set appropriate requirements for new ACOs to qualify. And it needs to set appropriate restraints to prevent this new system from being abused.

Under existing laws, the specific types of collaboration on which ACOs are based are illegal.  If physicians were to sit down with hospitals to discuss prices and negotiate how healthcare dollars would be divided between them, they would be violating STARK laws and other antitrust statutes.  While the Federal government needs to allow this coordination to occur to make ACOs possible, they also don’t want to allow players to lock up their local markets in an anti-competitive way.

The agencies involved have made a choice to set the bar high.  This will likely restrict ACOs, at least initially, to a relatively small number.  Organizations wishing to become ACOs will need to be completely dedicated to the concept.  Those wavering on the fence, looking to dabble in ACO-hood won’t become ACOs in this initial round.

This is clearly an intentional move from the regulators.  The desire is to start by establishing new healthcare structures and not allow early failures that result from doing an ACO half-way.  While everyone involved clearly believes ACOs can succeed, if they’re going to fail, they want that failure to represent a failure of the model.

The Problem
The proposed rule has many organizations up in arms with concerns spanning a wide range of issues.  In an interview with Healthleaders Media, Nick Turkal, MD, the CEO of Aurora Health Care in Milwaukee introduces the sources of anxiety:

  • Anti-monopoly provisions are problematic for many providers, but particularly those with a presence in rural communities where they may be the only providers for certain services
  • The rule moves very quickly to cost capitation which doesn’t allow time for provider organizations or patients to adapt
  • The proposal sets an inflexible approach to quality, efficiency and reporting that place a very heavy burden on these new organizations
  • Retrospective attribution, a process in which ACOs won’t know which patients are covered until after the fact, makes it impossible to proactively address care and cost concerns
  • In the end, the startup costs look to be much higher than expected

This last point is highlighted in a recent article in the New England Journal of Medicine titled The ACO Model — A Three-Year Financial Loss? The article suggests that the startup costs are now estimated to be 10 times what was originally envisioned when the legislation was drafted. And to recoup that in the 3-year period CMS has suggested will require a 20% operating margin – a level unheard of in healthcare organizations today.

Another critique includes a letter from the American Medical Group Association, an organization representing some of the presumed early movers into the ACO space such as Mayo Clinic, Cleveland Clinic, and Intermountain Healthcare.

Many organizations are question if the current proposal represents even a valid starting point for negotiations.  This has caused a group of Republican Senators to suggest that the ACO Proposal be withdrawn.

Pitch Number Two
While CMS has given no indication that it intends to pull the ACO regulation, CMS Director, Don Berwick, MD, has already begun to present ways that the agency intends to ease ACO adoption.  It’s unclear if these new measures represent a sufficient carrot to get the healthcare establishment on board.

Nevertheless, while we still don’t know what the details will look like, the principals involved will eventually become a part of the way that healthcare works in this country.  Smart organizations recognize that  a great deal must be done to prepare for this. They simply can’t wait for regulatory agreement to occur before beginning that work.