What Physician-led ACOs Can Teach Hospitals

Framing the issue:

• Physician practices are forming their own accountable care organizations, free of contracts with particular hospitals.

• Early returns have shown that such doctor-led ACOs have performed better than hospitals in the Medicare Shared Savings Program, with some saving millions by reducing hospitalizations.

• Hospital leaders can learn valuable lessons from such physician-led ACOs in forming their own shared savings strategies, such as opening access to care and using hospitalists to smooth transitions.

• Experts say that the next wave of accountable care, or ACO 2.0, will require tighter bonds among hospitals, physician groups and post-acute providers.

They’re out there, and they’re powerful — accountable care organizations led by independent physicians. Their goal, as with all ACOs, is to coordinate care better, improve quality and control costs. Many of these physician leaders view hospitals as cost centers, and they’re creating payer contracts with incentives to keep patients out of beds. Some are generating tens of millions of dollars by doing so.

How should hospitals view these physician-led ACOs? Are they a threat? Competitors? Potential partners? First and foremost, says Farzad Mostashari, M.D., former chief of the Office of the National Coordinator for Health Information Technology, these groups can provide important lessons for hospital leaders.

For example: Physician-led ACOs make a point of filtering every interaction through the patient’s primary care doctor. “If you want to transform health care delivery, you’ve got to go through the docs,” Mostashari says. “Don’t try to go around them so that they don’t notice any change. The whole point is that there’s got to be change.”

Even physicians themselves pay more attention to their medical colleagues. Doctors are much more likely to accept change and experiment with new care and payment models if they’re being led by physicians, says Mostashari, who recently started a company to help small physician practices form ACOs.

Hospitals can build bonds with physician-led ACOs by demonstrating their own ability to handle care efficiently and in the right setting, says John Combes, M.D., head of the American Hospital Association’s Physician Leadership Forum. Otherwise, hospitals may be viewed by the ACO leaders as vendors, rather than as true partners.

Doctors want clinical autonomy and an assurance that economics aren’t driving decisions on how to care for patients when forming partnerships with physician-led ACOs. Early returns have shown that physicians have performed better than their hospital counterparts in the Medicare Shared Savings Program. Combes believes hospitals can bolster their results in shared savings contracts by delegating the clinical arm of their operations to a physician-led, risk-bearing group with which they have partnered, and make sure that financial considerations aren’t the main factor driving decisions about patient care.

“Make sure that clinical decision-making is driven by professional standards and by what’s best for the patient, and not by the economics,” Combes says. “I think that’s where the fears from physicians are, that the economic imperatives of the organization will drive what they do clinically, and it really needs to be the other way around.”

Groups like Privia Health are eyeing big expansion with their models, which have demonstrated success, including readmission rates that are 20 percent below market and patient engagement metrics that are “off the charts,” says CEO Jeff Butler. In September, the technology, multispecialty medical group and physician practice management company based in Arlington, Va., announced it is receiving $400 million from an investor group to fuel further growth, with the aim of expanding nationwide, in markets such as New York, Atlanta, Florida and Texas.

Privia is seeking independent physicians, making the case that they can keep their autonomy while gaining some of the perks of being part of a large delivery system by joining its network. Butler says it’ll be on the lookout for hospital partners, too, but ones that want to work in concert with its doctors to provide care in the right setting at the right cost, and not simply dictate terms.

“We view the hospital as a partner,” Butler says. “Patients are going to need to go to the hospital, and we want them using high-quality, high-value facilities where the care is focused and efficient, and the outcomes that are produced are in line with a network that’s trying to manage value. We have strong hospital partnerships in our market and what we want is the kind of relationship in which we know the moment one of our patients shows up in an ER or gets discharged from a facility.”

This article explores what three cutting-edge, physician-led ACOs are doing to improve care coordination, lessons learned and advice their leaders offer to hospitals boost their own ACO strategies. Groups profiled range from a large, multispecialty practice in New Jersey that hired pharmacists to help cut costs, to a conglomerate of independent practices that is finding sizable savings in Florida. 

Palm Beach ACO: Palm Springs, Fla. - Doctor knows best in Medicare Shared Savings Program standout

When it comes to physician-led accountable care organizations, few have made as big a splash as the Palm Beach ACO. The Centers for Medicare & Medicaid Services earlier this year announced the results from the first year of its Medicare Shared Savings Program, which rewards hospital or physician groups for slowing the growth of health care costs while hitting quality metrics. Palm Beach was among 29 of 114 participating ACOs to surpass savings expectations. All told, the conglomerate of small, independent physician practices saved some $22 million in its first year, half of which goes back to the ACO and physician owners as a shared savings payment.

Medical Director Lenny Sukienik, M.D., says the biggest key to Palm Beach’s success has been working closely with independent primary care physicians to make sure they stay engaged with patients. Rather than employing coaches or health navigators, doctors manage patient care. Patients have open access to any primary care physician or specialist, and doctors create and help to oversee each patient’s personalized care plan.

“Who knows what the patient needs more than his or her primary care doctor?” Sukienik says. “It’s very easy to fall into that rabbit hole of saying, ‘I’m too busy; I don’t have the time to think about the patient. I don’t have time to do more than I’m already doing.’ The reality is that it’s our job. It’s just a matter of engaging physicians to go back to doing what they do best.”

Data are crucial to the Palm Beach ACO, which comprises about 110 primary care physicians and 95 specialists who serve more than 30,000 Medicare recipients. The organization carefully tracks internal quality and cost metrics, with Palm Beach clinical leaders checking in at each practice three times a month, and medical directors visiting quarterly to discuss data and tools available to practices to improve outcomes. Sukienik calls it a “grassroots approach” to educate doctors in care coordination. For those who don’t fall in line, the ACO has a three-strike process based on metrics, which results in asking physicians to leave the conglomerate after the third offense.

Hospital leaders may have been wary of Palm Beach ACO at first, not sure of its motives and how it might impact other area providers. But working in concert with the ACO has benefited hospitals by improving quality and satisfaction scores and enabling them to avoid readmission penalties, says Chief Information Officer David Klebonis. The ACO has developed close working relationships with hospitals and has looked to align incentives.

“Hospitals or primary care physicians alone would have a big challenge with ACOs,” Klebonis says. “We have been enormously fortunate that our hospitals have worked really hard toward this cause — providing better coordination tools, measuring outcomes and making quality a top priority. I think we’ve been successful because we have great relationships with hospitals.”

For now, the ACO is focusing on Medicare, with no immediate plans to delve into the commercial side. But growth is likely as the Palm Beach ACO seeks to enlist more doctors, believes Jerry Bailin, an 84-year-old retired jeweler, who is a Medicare beneficiary and who sits on the ACO’s board. Bailin says that for years he received unnecessary tests, no calls following discharge and poorly coordinated care, and he thinks there is no turning back for the health care system.

“The medical community at large is broken and this is one step in trying to fix it,” Bailin says. “As far as I’m concerned, if things like the ACO concept aren’t tried or given a chance, the medical community itself is in big doo-doo and it’s only going to get worse. This is a step in the right direction. Is it the only answer? No, but it’s one of the things that could help.”

Coastal Medical: Providence, R.I. - Patient engagement, activation help to fuel state's largest private practice

While some physician groups have focused solely on Medicare in their ACO strategy, Coastal Medical, has taken an all-payer approach to transforming care in Rhode Island.

The Ocean State’s largest physician-owned and -governed primary care practice, with 20 locations and more than 90 clinicians, has formed shared savings contracts with various commercial payers, from Medicare to Tufts Health Plan, piggybacking on its ACO with Blue Cross & Blue Shield of Rhode Island. The former has performed admirably, with Coastal announcing recently that it beat the cost benchmark set by CMS by about 5.4 percent over the first 18 months. That’s spelled about $7.2 million altogether in savings, around $6 million of which will be returned to the government, including $2.4 million in advanced payments originally paid by the feds to help cover startup costs.

President and CEO G. Alan Kurose, M.D., says bolstering access for patients has been one key way to reduce costs. To avoid unnecessary trips to the emergency department, the medical group has adopted what it calls Coastal 365, which allows patients to get a same-day appointment any day of the week, including weekends, evenings and holidays. Using a patient-centered medical home approach, Coastal utilizes various tools to stay on top of customers’ care, from accessing test results and making appointments via a patient portal, to calls from nurse care managers after discharge, and medical records integrated across the continuum that are easily accessible to every clinician involved in a patient’s care.

The practice places a special emphasis on staying engaged with patients. “A lot of us believe that patient engagement and patient activation are going to be key to long-term success in population health management,” Kurose says. “In the ACO, we’re making ourselves accountable for quality and patient experience metrics, as well as for efficient cost performance. You really do need the patients as your allies, and I think that they feel very connected to their primary care physicians.”

Coastal currently doesn’t have any shared contracts with hospitals, although it is able to coordinate with some by accessing patient records over the Rhode Island state health information exchange. However, that’s limited by the HIE’s opt-in provision. In the long term, Coastal would like to form tighter relationships and align incentives with hospitals to which its physicians refer patients, says Chief Medical Officer Edward McGookin, M.D.

Coastal already has tested certain collaborative strategies with Rhode Island hospitals. One example: a “warm handoff” project in which hospital pharmacists receive a list of Coastal patients who have one of a number of high-risk discharge conditions. The pharmacist consults with the patients to reconcile their discharge medications with their admission medications, assessing the changes made during the hospital stay. The hospital pharmacist then connects with the Coastal Medical pharmacist to ensure that the transition plan is in place.

The next step for physician-led ACOs is to align incentives with hospitals and other providers in the care continuum, says Gus Manocchia, M.D., chief medical officer of Blue Cross & Blue Shield of Rhode Island. Hospitals and health systems don’t necessarily need to own all the pieces of the care puzzle, he believes, if they can maintain solid relationships with everyone from physician practices to skilled nursing facilities.

Coastal’s shared savings contract with BCBS got off to a slow start its first year, but it’s starting to pick up steam in the second, Manocchia says. That’s one lesson hospitals should keep in mind in forming their own ACO strategy: New care and payment models need time to take root in an organization, for knowledge to trickle down to the rank and file, and for the benefits to begin to show.

“Even when you have incentives in place to see the right things happen, this all takes time,” he says. “A lot of providers and some payers have expected this to happen like a light switch going on — as soon as you put the appropriate incentives, contract and providers in place, that all of a sudden you’re going to see this huge amount of money being generated from reductions in waste. It doesn’t happen as quickly as all of us hope it would.” 

Summit Medical Group: Berkeley Heights, N.J. - Resetting incentives for hospitalists helps practice to save millions

To successfully move to the new model of care, hospitals and others must make sure they’re providing services in the right setting, says Summit Medical Group Chairman and CEO Jeffrey LeBenger, M.D.

The Berkeley Heights, N.J., multispecialty practice, with more than 300 employed doctors, champions a model that focuses mostly on its urgent care centers. Hospitals are used only for more serious inpatient care.

Summit has entered into several shared savings, accountable care contracts with insurers. It has shown early success, lowering the cost of care by about 12 percent for 25,000 patients in its Horizon Blue Cross Blue Shield of New Jersey contract, and tallying the highest quality scores in the state. Hospital leaders seeking similar results must move away from the “heads in beds” mindset, LeBenger asserts, and “empower the physician group to make decisions on how to handle patient care.”

When Summit patients do need inpatient services, the medical group deploys its own employed hospitalists. A key twist is that, rather than working on a fee-for-service basis, hospitalists are paid based on quality metrics such as length of stay, readmission rates and physician satisfaction.

Summit sorts through data on patients and determines their risk of readmission. Hospitalists go through a precise handoff method with each patient at discharge. A physician assistant pores over each patient’s discharge record, reconciles his medication and reads over his electronic record to ensure that no tests are duplicated, says Amina Ahmed, M.D., director of hospitalist medicine at Overlook Medical Center, in Summit, N.J.

Those changes have helped to save about $77 million at hospitals over nearly six years by reducing the number of bed days. Putting the right incentives in place for hospitalists has been key, Ahmed believes. “We can filter our patient care based on the quality expectations rather than the economics that would incentivize us to perform very differently.”

Summit also uses extensivists who go back and forth to skilled nursing or rehab facilities to monitor patients, ensure high-quality care and avert hospital readmissions. CMO Robert Brenner, M.D., estimates that Summit is able to extend care to those outside facilities about 70 percent of the time. In addition, the medical group carefully vets the post-acute facilities to which its patients are discharged, making sure they follow quality metrics and stay in contact with the medical group throughout the process.

Brenner says strong leadership and the ability to share records with other facilities are critical. “If you have a hospital ACO with disparate electronic health records, physicians who are not communicating and working with each other, and don’t have program development around caring for patients as they transition in care, you’re going to be at a disadvantage.”