Illinois’ largest hospital system and biggest health insurer agreed in late 2010 to form an accountable care organization, a network in which the organizations would cooperate to boost quality and restrain cost increases, sharing in any savings. Chicago-based Advocate Health Care gambled that its portion would compensate for the lost revenue from the resulting empty beds.
Now, with six months of operating data in hand, Advocate and partner Blue Cross Blue Shield of Illinois claim spending reductions that are greater than those for patients outside the network. The results thus far are inconclusive but are encouraging evidence, they suggest, that ACOs can help reduce doctor and hospital visits and the use of expensive procedures.
“It’s clear we’re driving down utilization,” said Lois Elia, vice president at AdvocateCare, the ACO run by Chicago-based Advocate Health and BCBSIL. She spoke at a Washington summit on payment reform this week sponsored by America’s Health Insurance Plans, the health insurance trade association.
For the first six months of 2011, AdvocateCare’s hospital admissions per member fell 10.6 percent compared with 2010 results, and emergency room visits were down 5.4 percent, Elia said.
Due to the poor economy, patients across the country have delayed seeking care, causing an improvement in utilization trends. But AdvocateCare’s experience was better than BCBSIL’s overall results for the period, suggesting that something else was going on.
“The economy impacted some of this,” Elia said via email. “But since our medical cost trend was 6.1 percent below market, it shows our reductions were likely due to prevention of ambulatory-sensitive conditions through better care management, physician access and the like.”
Key to the results were the hiring of 60 “care managers,” many embedded in physician practices, to manage high-risk cases and post-acute care, she said.
Also important are a relatively narrow provider network, anchored by Advocate’s 10 hospitals and about 4,000 physicians, and a payment system that incentivizes Advocate to contain costs but doesn’t put it at risk of catastrophic loss, said Dr. H. Scott Sarran, BCBSIL’s chief medical officer.
The 2010 health law provides for Medicare ACOs, known as shared savings programs. But private insurers such as BCBSIL are setting up ACOs on their own.
With 250,000 PPO members and 125,000 HMO members, “we do think we’re the largest commercial ACO in operation now,” said Sarran.
Six months of data do not guarantee success of the three-year experiment. “This is good but too early to draw conclustions,” Elia said. Still, she added, ”we get calls weekly from people that want to understand what we’re doing and the value it’s creating and how we’re going about it.”
Subscribe
I thought ACO success was cost control in harmony with quality measure results suggestive of better patient health. I only see mention of cost containment in the article -sounds like HMO speak
This is not an Accountable Care Organization as the shared savings formula and results of quality improvement are put on the back burner in favor of replacing revenue lost in inpatient care. Bundled payment BY ITSELF will not improve care or make providers remove waste from the system, rather providers will merely try and recover what they were loosing by delivering preventable and avoidable care. As Hospitals seize control over physicians in these alleged ACO strategies physicians are not going to get a bonus UNTIL all inpatient income lost is replaced AND THEN the leftovers go to the doctors or , in this case, paid to the specialty LLCS in bundles for them to “scrum” over .
ACO regs are very clear , ACOs are a physcian led enterprise. Physicisns who want to lead need to organize and find a partner whose goals do not conflict with removing waste from the system.If hospitals can drive down physcisn bonus and insueres make more monbey by having more utilization drive premium revenue higher why would you partner with these industries who created the mayhem?
This is a statistically meaningless result. Hope is what ACO’s are built on, but the model depends on predicting health care costs in advance, which isn’t going to happen with any accuracy. Also, doctors, the insurance plan, and the hospital are all on the same side of the money, pitted against patients.
This is an inherent conflict of interest for physicians, and is a bright line which never should have been crossed. The physician patient relationship is destroyed, and the patient doesn’t even know it.
The ACO model will fail, but I’m glad some exist so as to demonstrate it sooner rather than later.
What I see is the move towards industrializing healthcare. This means using the tools other industries have pioneered, like process engineering, to eliminate redundancies, extract costs, streamline processes, automate, measure, mine internal data, and focus on patient outcomes, wellness and satisfaction in order to increase profitability. New technologies are now coming into play that will enable the industrialization of healthcare.