Laying the Foundations for Coordinated Care

You’ll also plan on participating in the Medicare ACO program?
Yes. And we already have over 5,000 patients in a Medicare HMO, so we already meet that criterion. We’re hoping our physician organization will ultimately be in a funding arrangement with all of our major hospitals. I’ve met with each of the CEOs of the hospitals, and they’re all OK with that. Each of the hospitals to date is interested in doing a pilot ACO project.

Do you have any concern over the potential for hospital-hospital and hospital-physician infighting?
Oh, I absolutely know that there’s going to be infighting; I’m not naïve about it. But for the first time in memory, the hospitals realize they are going to have their dollars controlled at least in part by physician care. And hospitals are realizing they won’t be able to engage in practices like phantom billing anymore. Conversely, the physicians realize that in order to continue to receive reasonable reimbursement, they’ll have to provide care in a cost-effective and quality manner; and until recently, physicians haven’t wanted anyone to tell them how to practice medicine.

So the physician organizations that will win will be those that will have created a culture of accountability, transparency and quality. We’re in the process of maturing our own culture, in that regard. And if a letter comes into a physician saying you have to change your prescription, the doctor will be unhappy. But if it’s an electronic message in real time, asking the physician to use an approved generic, that change is no longer onerous. And most of our physician offices are used to working within the EMR now. And every physician now knows how to log on and knows they’re expected to use the system; and they’re being tracked and nudged to use the system.

Do you think physicians in your organization realize that this is the way healthcare has to evolve?
Yes, I think there’s a realization, finally, especially with the threat of massive Medicare cuts all last year, and the fact that Medicare just stopped sending money for periods of three weeks at a time—I think that made every physician realize that something had to happen. And not all physicians embrace everything in federal healthcare reform, but there wasn’t a big uprising against it, either. I personally think we have to make these kinds of changes, apart from specific details. Now, I’ve been in practice for over 30 years now. And we’ve done all the low-hanging fruit—the days where you could easily cut a day off of a hospital stay; we’ve done all that. So we need to move forward to make care more effective.

The most elegant proof of a math equation is the fewest number of steps to a right angle; and I still believe medicine has to be done that way. We need to identify what the right way is to practice, and not have redundancies of approval and utilization management. And the great thing about the computer is that you can practice every day and see how you’re doing.

It’s all about accountability and transparency, correct?
Yes, and we’re trying to do those kinds of things. I don’t pretend that we’re as far along as some, but we’re moving forward. And one thing to note is that 40 to 50 percent of the patients in California are a part of Kaiser. And I’ve always maintained a close relationship with my patients who go into and out of Kaiser, as their employers change contracts. But Kaiser has made reimbursement lower, frankly, in Northern California, while the cost of doing business is higher here than in other parts of the country. So we’ve already got certain elements in our landscape now.

What kinds of things are needed, IT-wise, to make ACO organizations successful?
I’m not a super-fan of EMRs in terms of the improvement in the quality of records in the EMR; but you do know when a patient was seen, what they were seen for, and so on; and that is finally now being done in a way that the EMR can be usable and of benefit. And let’s face it: the big dollars are spent in the hospital. The amount of money spent on outpatient care is relatively tiny. And so the quality of inpatient care is going to have to continue to be improved.

All patient care organizations and clinicians will also have to be working forward in terms of systemically averting unnecessary readmissions as well, correct?
Correct. And I think the way to avert readmissions is to be able to know what happened before they were admitted in the first place. And the second thing is that you have to avert emergency room visits. And the easiest thing for the emergency room doc, no matter how well qualified, is to admit a patient to the hospital.