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Catching the Tiger

February 21, 2011
by Mark Hagland
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Ready for the New Contracting? It'll Be a Huge IT-and Strategic-Challenge

Preparing to go for the new Medicare payment opportunity involves risks and rewards-and likely an overhaul of your organization's IT strategy

The inclusion of the concept of accountable care organizations (ACOs) in the comprehensive federal healthcare reform legislation passed last March could well prove to be a watershed development both for healthcare in the U.S., and for the healthcare IT sector. Indeed, say industry experts, the success of ACOs-which will collectively accept payment for coordinated care for patients, and receive back from the Medicare program a portion of the cost savings they achieve-will rely on equal doses of strategic thinking and planning on the one hand, and intensive data management and analysis capabilities on the other.


The Patient Protection and Affordable Care Act (PPACA), the federal healthcare reform law, created a provision for accountable care organizations, with a Medicare Accountable Care Organizations Shared Savings Program to be established by Jan. 1, 2012. The federal Centers for Medicare and Medicaid Services (CMS) defines an ACO as “an organization of healthcare providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.” Importantly, the legislation was written with a purposeful flexibility so that a variety of combinations of physician group types, hospitals, and hospital-physician partnerships could qualify to become ACOs. What's more, say experts, once the federal program gets going in earnest, there's no question that private insurers will start exploring the potential to create private versions of the concept as well.

For healthcare IT leaders, the challenges of ACOs are tremendous, and experts see only a very small minority of patient care organizations nationwide that are optimally positioned right now to take advantage of the new law. Fundamentally, experts see hospital, medical group, and health system leaders struggling with the same core problems when it comes to preparing for ACOs as across other areas: a landscape of fragmentation, with silos of data that can't be accessed or understood in a timely way, in order to make the clinical interventions needed to improve care and control costs, that will drive success under ACO arrangements (as of press time, the federal government had not yet released the specific regulation to give providers the level of specificity they'll need when applying for the program).

“I think the movement towards integrating quality and outcomes with the overall cost-effectiveness of care is something that we've been talking about in the industry for the whole 24 years I've been involved in it,” says Mark Jamilkowski, a senior manager in the Health Care Advisory Practice at the New York-based KPMG LLP. “And I think previous attempts have come in fits and starts. We haven't had the information technology or the data to do it properly. But now that we have the clinical knowledge itself, combined with the ability of information technology to really analyze the data in multiple ways, it really creates a robust environment to support a quality-based, comprehensive care management approach to healthcare delivery.”

One well-known industry leader who says he sees the shape of the future is Brent James, M.D., chief quality officer at the Salt Lake City-based Intermountain Healthcare, and executive director of the Intermountain Institute for Health Care Delivery Research. James was one of the leaders behind the announcement in mid-December that six leading healthcare organizations-Intermountain, Cleveland Clinic, Dartmouth-Hitchcock, Denver Health, the Geisinger Health System, the Mayo Clinic, along with the Dartmouth Institute for Health Policy-were forming a collaborative to share data on outcomes, quality, and costs, across a range of common conditions (beginning with total knee replacement), with the intention of rapidly disseminating knowledge and insights to improve care quality and cost-effectiveness (key goals of the federal government in creating the ACO concept within healthcare reform). Not surprisingly, James believes that Intermountain itself could very quickly be prepared to apply for ACO status as an integrated health system, based both on its integrated approach to care across multiple hospitals and medical group sites, and its history of IT innovation.


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