A Safety Net?

An interesting article trickled across the wires the morning courtesy of HC Pro. Subtly titled “Could ACO’s Appear on the Medicare Payment Horizon?” it tees up an interesting conversation I’ll get to in a second. First, a couple of prefaces that made this story particularly interesting.

On January 21, 2009, an article by primary care physician, Benjamin Brewer, M.D., appeared in the Wall Street Journal under the title, “How to Make Primary Care Better.” Among other prescriptions, one line particularly caught my eye: “To get real reform we're going to need to put more money into primary care. I have a few suggestions about where to start looking for it…we can revoke the tax exemptions of supposedly nonprofit hospitals that don't fulfill their mission of community service.”

I had forgotten about this piece until a front-page article appeared in the Chicago Tribune last week, “Are Hospitals Passing Off Their Low Profit Patients?” The article bluntly rapped metro-Chicago hospitals for the amount of charity care (more specifically, the small amount of charity care) they provide. A sidebar article recounted the Illinois Supreme Court’s decision last fall rejecting Provena Covenant Medical Center’s (Champaign-Urbana, IL) argument that free care should not be the sole determinant in deciding if a hospital is keeping its charitable promise. Provena Covenant had its tax-exemption repealed 5 years ago and remains in court on the issue.

Over the past few years, presumptive Illinois Gubernatorial hopeful, now-Attorney-General Lisa Madigan has made noise about hospital tax exemptions. The sharks are certainly circling.

That said, the economy is doing hospitals some favors. Uncompensated care cases are up. And, with non-operating, investment income in the toilet, it’s probably politically unpalatable to hunt wounded organizations - especially the only sector that has, up until recently, added 13,000 -17,000 jobs to the economy month to month.

This leads me back to the opening article of interest on the latest healthcare acronym…ACOs. An ACO, an Accountable Care Organization, “can include a variety of hospitals, primary care physicians, and possibly specialists. Potential ACOs could be made up of integrated delivery systems, PHOs, hospitals with multispecialty groups, or even academic centers.”

“However, ACOs would work to promote improved "care coordination and collaboration with providers," working with a defined group of Medicare patients, "the hope would be that unnecessary services would be reduced and quality would be improved."

“In turn, provider payments or bonuses would be tied to quality and resource use. Quality benchmarks, for instance, could include objectives such as lower mortality rates or hospital readmissions.”

An intriguing idea. Finally, serious talk about how to hold the hopefully-reasonably-integrated delivery system accountable for performance, and rewarding them for doing a good job. MedPAC reports there’s support for the idea in Congress as health reform motors along.

So, this is where the safety net might come in. With snipers poised like Navy Seals, holding tax-exempt status in their sights, it seems to me that hospitals are the most capable enterprises to construct/sponsor ACOs. They have the management, the cash, the business systems and the know-how to corral the disparate pieces an ACO would need to be successful. In the Integrated Healthcare movement of the 90’s, beyond a few exceptions at places like Alta Bates and San Jose, hospitals were the agents of integration. This time around though, the spin is more productive. The 90’s were all about control of covered lives. The more you had – hoarding them like rollover minutes in a popular cell phone commercial – the more power you had.

The idea is not completely new. An article appeared in Health Affairs back in December 2006, introducing the ACO as an, “Extended Hospital Medical Staff” as “essentially a hospital-associated multi-specialty group practice that is empirically defined by physicians’ direct or indirect referral patterns to a hospital.”

In February 2007, the Commonwealth Fund reported on the paper, noting, “seriously ill patients receive care from many clinicians in many care settings, proper coordination among these professionals is critical to ensuring that no significant gaps in quality occur. That is why reform efforts focused solely on holding individual providers accountable for the care within their direct control may do little in the end to improve the overall quality of care…Previous efforts in this direction have targeted traditional health maintenance organizations or multispecialty group practices. But these groups represent only a tiny share of the current market: most U.S. physicians are employed in solo or small group practices.”

“Performance measurement and public reporting at the extended hospital staff level is the logical first step to implementing such a system and could begin nationwide relatively quickly.”

While maybe not echoing the acronym, in their February 2009, publication, “The Path to a High Performance U.S. Health System” the Commonwealth Fund did “encourage greater shared accountability for a continuum of health care services. Bundling payments for care needs over a period of time—including physician, hospital, and other clinical care—provides a financial incentive for hospitals and physicians to join forces to improve quality of care and reduce avoidable complications, hospital readmissions or episodes of care.”

As a hospital strategist, I would be attracted to the possibility of the ACO as a pathway to legitimized authority within the delivery system and a defense against cash hungry taxing authorities. It’s always better to be able to show you’re part of the solution than part of the problem.