After years of looking across the proverbial table and arguing over every last cent of a contract, payers and providers are finally playing nice. They’re sharing goals such as better care coordination, and forming accountable care organizations (ACOs) and bundled-payment contracts, all with the intent of lowering costs and improving care. They’re sharing data. They’re starting to trust each other—at least within certain carefully delimited parameters. It’s a brand new world.
“What payers and providers have typically done is sit across the table and argue over contract rates,” says Charles Kennedy, M.D., CEO of accountable care solutions at the Hartford, Conn.-based Aetna. “That’s such a limited relationship and it’s so superficial. The value you generate from that is generally known as a win-lose negotiation. Someone is a winner, someone is a loser. In our view, the relationship between payer and provider has to evolve to a win-win relationship where the payer only makes money when the provider is clinically and financially successful.”
Charles Kennedy, M.D.
Kennedy says this is the strategy that Aetna incorporates in its payer-provider relationships, including the one it has established with the Flemington, N.J.-based integrated health system, Hunterdon Healthcare. In fact, under the agreement, Hunterdon will be paid only by achieving quality, efficiency, and patient satisfaction measures. The two sides have agreed upon shared goals such as lowering readmissions and reductions in emergency room visits.
To support this ACO, both Aetna and Hunterdon are providing a technology framework that includes a full electronic medical record (EMR) from NextGen (Horsham, Pa.), clinical information systems on the inpatient side from QuadraMed (Reston, Va.), health information exchange from Medicity (Salt Lake City), clinical decision support tools, a picture archiving and communication system, and an OR system as well. There’s also a strong investment in analytics for the population health perspective, Kennedy says.
Beyond all of these investments, Hunterdon has put millions into IT infrastructure that can tie all the disparate vendors and systems together. Glenn Mamary, Hunterdon’s CIO, says he and his colleagues are using products from InterSystems (Cambridge, Mass.), including a clinical data repository. The health system will also create an enterprise master index for patient safety reasons. “That is the glue that brings everything together, and that is so important. It’s data integration and data integrity,” he says.
Both sides see the ACO relationship as a continuous evolution. According to Mammary, in the near future they’d like to use analytics tools for predictive modeling, so they can see who is at risk for readmission before it happens. With both sides working hand-in-hand, using infrastructure and clinical information tools to provide care in and outside the four walls of the hospital, Kennedy and the others see the ACO creating an environment where data is simple and actionable.
Across the country, Blue Shield of California, a San Francisco-based health plan, is employing a similar strategy to Aetna. Simon Jones, director of accountable care organizations at Blue Shield, says the organization launched its first ACO in 2010 with Hill Physicians Medical Group, a collaboration that has gone on to be widely successful. Since then, it has launched nine additional ACO partnerships, connecting with a variety of different healthcare organizations, he says.
From a cost perspective, Jones says, the ACOs are beneficial. “We’re seeing ACOs trending at about three percent per year, and in California we’re seeing the rest of the business trending in the seven-to-eight percent range. There’s a really significant variance between the cost of an ACO and a non-ACO,” he says.
More important that, Jones says the various ACOs are seeing clinical results, with drops in readmission and ER utilization rates. “We consider this to be at the beginning level of what we’re going to accomplish,” Jones says. Similar to the Hunterdon/Aetna team, he expects technology advancements in analytics and data sharing to advance things even further.
LONG ROAD AHEAD
Authors of a recent report from PricewaterhouseCoopers (PwC) Health observed that it’s payers who hold a treasure trove of useful data needed for effective population health. According to John Edwards, director of healthcare strategy and healthcare business intelligence practice at PwC, and one of the report’s authors, “Most payers have made significant investments in data on their consumers, about their healthcare.”
For this reason, providers are willing, more than ever, to work with, and not against, their former “adversary.” Payers are seemingly equally as willing, with major players such as Aetna, Highmark, Wellpoint, and UnitedHealth, among others, having all announced these types of partnerships in the past few years with providers.
However, this type of collaboration, where trust is of the upmost importance, isn’t going to change overnight. The folks at Hunterdon and Aetna advise others to start as early as possible, respect the other side, and recognize that the process takes time. Clinical results, they say, will also require patience, as they steadily improve over time.
In California, Jones has a similar philosophy and belief in getting on the same page from the get-go. “I think one of the real key ingredients for our success was developing an early shared vision, and understanding the importance of doing this together, so someone doesn’t do it for us,” he says. “That leads us to an environment of trust.”