Most of the development and media attention regarding accountable care organizations (ACOs) has centered on an adult patient population. That's not necessarily surprising considering the Affordable Care Act's push for the creation of ACOs to treat Medicare beneficiaries.
But the ACO concept also can apply to other patient populations, including children, who also would benefit from coordinated care, improved healthcare quality, and lowered costs. That's why Children's Hospital Los Angeles (CHLA) is entering the ACO market, not only as a participating ACO provider but also as the operator of its own pilot ACO with the support of Blue Shield of California. FierceHealthcare recently caught up with CHLA's CEO Richard Cordova (pictured). Read on to hear what he has to say about the unique role of children's hospitals in ACOs, why it has to be "Switzerland," and why some ACOs will win and others will fail.
FierceHealthcare: Most people are focused on how ACOs will help manage the care of the senior population. How do children's hospitals fit into the ACO model?
Richard Cordova: Children's care needs to be managed, as well, especially those with chronic conditions. We have quaternary services at CHLA, but we only get the kids when they're sick. You need to manage the care of children across the continuum of care, from wellness to acute care to post-acute care.
FH: How will children's hospitals be structured in order for them to participate in ACOs?
Cordova: It will vary by market. An ACO is a resurrection of capitation. The provider is more at risk than with fee-for-service. California is a fairly mature market with global capitation and payment reform. We already have medical groups and hospitals that can take full risk. Children's hospitals need some of the infrastructure of an ACO to handle new payment methodologies. There are eight children's hospitals in California; some may create a regional or two-hospital ACO. The children's hospital in San Diego is going solo; I don't know if they'll all be full-fledged ACOs. You have to increase your analytic staff to handle it all.
FH: What are CHLA's plans in partnering with other organizations?
Cordova: We're looking to partner with other ACOs, plans, and systems in different regions. We need to be Switzerland. A lot of networks are asking CHLA to partner with them. As a result of these discussions, we will partner with medical groups, plans, public entities, and clinics.
FH: What is CHLA hoping to achieve by participating in ACOs? What kind of outcomes do you expect?
Cordova: We're hoping to see more alignment between hospitals and physicians. If providers are sharing risk, it transforms the whole system and how patients are treated. For instance, we need protocols when a kid is admitted to reduce the length of stay, and we need physicians to agree to the protocols. We also need shared governance. These [initiatives] need to be physician-driven.
We're hoping to bend the cost curve and get away from fee-for-service, keep people healthy and keep them in their home, do preventive things, and avoid hospitalization of kids.
FH: I understand that CLHA also plans to operate its own pilot ACO program with insurer support. How will the pilot program work?
Cordova: CHLA received a $1 million grant from Blue Shield of California to pilot an ACO for children in its health plan. California has a program called California Children Services. Kids who have certain diseases or illnesses, such as diabetes or cancer, are eligible for this program. With the grant, we're creating a pilot ACO program to treat these kids on a capitated basis. We will go live with the pilot Jan. 1, 2012. We will have 6,000 kids in the pilot. If we're successful, we'll build our capabilities.
FH: What do you see as the biggest challenge for children's hospitals participating in ACOs?
Cordova: The biggest challenge is having the ability to calculate the cost of care to take on risk and negotiate the correct payment for it. A lot of children's hospitals are not experienced in capitation. We'll see a number of failures in the market.
[ACOs] also need the ability to manage the care, to operationalize it, see if the patient is in the right part of the continuum.
FH: What advice do you have for other children's hospitals thinking of building or participating in an ACO?
Cordova: Some people are waiting. But if you wait, you may end up as a bottom feeder. You don't want to be there. Move up the food chain. Also, you need experience. I had experience in prepaid models; I was President of Kaiser Permanente of Southern California. If you don't have experience with prepaid models, get experienced people to run it.
This interview has been edited and condensed for clarity.