Some hospitals and other providers have been taking a "wait-and-see" approach when it comes to accountable care organizations (ACO), perhaps concerned about the capital expense, uncertain return on investment, and compliance issues. Not Des Moines-based Iowa Health System (IHS), which is building an ACO for its regional health system that includes eight hospitals and more than 450 physicians. As a finalist in Medicare's Pioneer ACO program, the system could be one of 30 selected Pioneers, enabling more experienced groups to work together to better coordinate care with a higher level of savings and risk than the Shared Savings program. The Pioneer program model also is designed to provide coordinated care with private payers. IHS is currently negotiating with private payers and expects its ACO to go live with both government and private payer engagement in 2012.
FierceHealthcare caught up with IHS Vice President and Chief Medical Officer Dr. Alan S. Kaplan (pictured), who's in charge of clinical coordination of the ACO. Read on to hear what he has to say about physician employment, CEO buy-in, and why ACOs are difficult work but worth it in the end.
FierceHealthcare: Why did IHS decide to create an ACO when some of the other health systems in the country have held back?
Alan S. Kaplan: We decided a long time ago, regardless of healthcare reform, that the concept was right. Fee-for-service will always have waste in the system. We're moving to a patient-centered, physician-driven concept to create value, lower costs, and improve quality.
FH: What is IHS hoping to achieve with the ACO? What kind of outcomes do you expect?
Kaplan: We want to align our physicians and create and demonstrate value. An ACO is part of value-based purchasing. Moving to an ACO will improve the patient experience, improve quality of care, and hold costs at bay. We also think that in the long term, providers will be happier because they'll be getting paid for providing high-quality care and work with patients to make them healthier. It's a win-win-win for everyone.
FH: IHS is building an ACO with multiple contracts, both private and government. What attributes make your ACO approach unique?
Kaplan: To drive change, you need the physicians on board. This is a pervasive problem because more physicians are independent of their hospitals and in a fee-for-service world. And having employed physicians doesn't necessarily mean that they're a cohesive group. So you need to make all of the physicians a team.
We have both employed physicians and independent physicians. They need to be aligned, work together and be leaders in the ACO to lower costs and improve quality. So we created our own internal "physician academy" to address these issues and make the physicians leaders.
FH: What has been the biggest challenge in creating your ACO?
Kaplan: Our biggest challenge is to change ahead of changes in the payment system. We live in a fee-for-service, volume-based payment system, which is driving behaviors. We're trying to transform the system in an environment that doesn't pay for that. For a doctor to talk with the patient's family, monitor a patient's medications, coordinate care, educate the patient, and navigate the system, all takes more time with no payment for that. We will be working in two systems until the whole healthcare system converts to value-based purchasing. It's a challenge to do the right thing and stay financially solvent until the whole system converts.
We'll start in 2012, but it will take constant years of hard work, and we will improve over the course of many years.
FH: Health information technology is an integral component of coordinating care in an ACO. How is IHS tackling this issue?
Kaplan: We already have an ambulatory electronic medical records system for our physicians. The hospital is converting to a new system. We are also working on our data warehousing to use our systems to enhance care, identify patients at risk, and provide data reporting.
FH: You said that most health systems working on forming ACOs are building them from scratch. What advice do you have for other hospitals and health systems thinking of building an ACO?
Kaplan: You must have a board and chief executive officer steady and unwavering in their belief in it. You need a consistent message and have them ‘walk the talk.' It's very difficult work. Our CEO, Bill Leaver, is totally committed to it. If not, it would be impossible for him to do his job.
This interview has been edited and condensed for clarity.