An article that appeared on Tuesday in the Health Affairs Blog was both fascinating and bracing. Authored by Nicolas Stine, Dave Chokshi, Janine Knudsen, Megan Cunningham, and Ross Wilson, “How America’s Largest Safety-Net Health System Built A High-Performing Medicare ACO” really is must-reading for anyone tracking the ongoing evolution of accountable care organization (ACO) development work specifically, and the shift towards value-based healthcare delivery and payment more generally.
As the article’s authors, senior leaders at the 11-hospital New York City Health & Hospitals Corporation (NYC Health + Hospitals), write, “The strategic implications of ACOs for safety-net providers and health systems are less clear. Some have questioned whether the safety-net health systems that serve a large portion of the country’s Medicare, Medicaid, and uninsured population are capable of the financial and structural investments necessary to succeed as ACOs. Others have identified unique strategies to help safety-net ACOs do well but predicted only modest and incremental success. Ultimately, it is not yet clear how the shift from volume to value will impact the financial viability of safety-net providers,” they write.
“Meanwhile,” they say, he need for a sustainable business model for safety-net systems could not be more acute. Along with rapid payment transformation and regulatory uncertainty affecting all health systems, safety-net organizations face particularly difficult financial circumstances. The simultaneous squeeze of decreasing subsidies and a payer mix tilted toward Medicaid and uninsured patients makes fee-for-service financing uniquely challenging. The future of safety-net systems, therefore, may be particularly dependent on their ability to adapt for success in the new value-based payment architecture. In this environment, the largest safety-net health system in the country, NYC Health + Hospitals, formed an ACO in 2012 to participate in the Medicare Shared Savings Program (SSP). Exhibit 1 offers an overview of the ACO at a glance,” they report.
The results of this initiative, to date? Impressive. As the authors write, “In its first four performance years, the NYC Health + Hospitals ACO (HHC ACO) has reduced costs by 4–12 percent annually compared to benchmark, while continually improving quality; it is the only ACO in New York State to achieve shared savings in all four Medicare SSP performance years. Overall costs to Medicare have been reduced by more than $31 million, generating shared savings incentive payments of nearly $14 million.” Honestly, those results would be impressive for any hospital-based patient care organization in participating in the MSSP. For a public hospital system? One could legitimately call them spectacular.
What’s more, data and analytics have been enormous drivers of NYC Health + Hospitals’ success. As the authors note, “Key insights from our initial analyses of ACO claims data were major drivers of how we set strategic priorities and drove performance. Among the most valuable tools provided to an ACO are the feeds of comprehensive claims data received monthly from Medicare. While we historically have had access to claims data for certain managed care subpopulations, the Medicare fee-for-service data are unique in that prices are regionally uniform and patients do not have network limitations. The ACO claims data therefore provide for more unfiltered analysis of how our patients interact with health care providers across settings and how our population’s use compares to local and national benchmarks.”
Now, the authors do concede that they actually started out with a few advantages, from an operational standpoint. “First, compared to our ACO cohort,” they concede, “we had low rates of certain types of high-cost elective outpatient use at baseline. For example, our expenditures per patient on magnetic resonance imaging (MRIs) are the lowest of all ACOs nationally. We hypothesize that this is driven by our role as the primary provider of many costly elective services (for example, advanced imaging and specialty care) for New York City’s large uninsured population. We have a limited supply of these resources and provide them according to clinical need and regardless of ability to pay.”
As a result, the NYC Health + Hospitals leaders note, “Our clinicians therefore become careful stewards of imaging and specialty care, and seek to promote access through avoiding unnecessary tests or referrals. Consequently,” they write, “we were able to devote less time and energy attempting to curb excessive or wasteful elective use compared to most other ACOs. Indeed, many health systems have historically developed fine-tuned financial machinery embedded throughout their operations to wring revenue out of the fee-for-service market. It was clear from our utilization data that we were already lean in this regard and could focus more on reducing costs in other areas.”
In addition, they note, “[O]ur costs were heavily concentrated in hospitalizations for patients with exacerbations of chronic medical and behavioral health conditions. Furthermore, among our most frequent users of acute care services, there was higher use of outside health systems in our dense urban setting. While most ACOs naturally focus on their high-utilizing population, it appeared that our performance would be particularly driven by our ability to better manage this fragmented care for a complex and chronically ill population.”