Physician Leadership in Changing Times

In health care, as in life, change is the only constant. Today, the tides of change are pushing the health care system toward ever greater shared accountability among physicians, hospitals, and payers. Whether that change will ultimately benefit patients – or simply become an exercise in rearranging the deck chairs on the Titanic – will depend, in large part, on the skill of those who are leading the movement. As physician leaders of three of the nation׳s largest integrated health care delivery systems – Kaiser Permanente, Virginia Mason Medical Center, and the Mayo Clinic Health System, respectively – we believe physicians must be central to this effort, in solid partnership with skilled administrators.

Among all providers, physicians have a disproportionate impact on the health care system and therefore have a disproportionate responsibility and opportunity to lead change. Patients experience their own health and the health care system in many ways: physically, socially, psychologically, and financially. As the first and primary point of contact with the health care system for most people, physicians must therefore act as caregivers, teachers, trusted information sources, and fiduciaries for their patients. They cannot and should not opt in and out of accountability toward their patients in any of these roles. In post-reform health care delivery systems, physicians are ideally positioned, and in fact compelled, to take responsibility for helping shape the health care system – not just their own practice – to better serve patients׳ physical, social, psychological, and financial needs. Many physicians in small, private practice are already experienced as civic and small-business leaders in their communities. However, the skills needed to run a small business and manage its resources are very different from those needed to lead delivery system change. This expanded paradigm of physician leadership cannot be accomplished working in isolation from the integrated systems of care, nor with indifference to the resources necessary to achieve good outcomes for entire populations.

We have a uniquely bright view of physicians׳ ability and willingness to take on this expanded leadership role. We also believe physicians can be led as trusted and respected members of a team that is greater than the sum of its parts. We call on physicians as a profession to view leadership – and the development of leaders – as key aspects of their role as advocate for their patients. In doing so, we draw on our 68 years of collective experience leading physicians into stable, respectful relationships with other delivery system stakeholders to support some of the most successful, patient-centered care systems in the nation.

Click here to read more about  “Why now, and why physicians?,” “What is a physician leader?,” and “Policy levers” in the full article by Drs. Jack Cochran, Gary S. Kaplan, and Robert E. Nesse in Healthcare: The Journal of Delivery Science and Innovation.

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Learning from Medicare Advantage: Moving Toward a Better Model for American Health Care

Despite the political angst, the doomsday predictions and a very rocky launch, the Affordable Care Act has enabled more than 8 million Americans to acquire insurance coverage through the public exchanges.

Health insurance increases the probability that patients will access the medical care they need. And my colleagues at Kaiser Permanente are already seeing some positive stories emerging as a result.

They’ve shared dozens of stories with me about patients with undiagnosed medical problems who are now receiving treatment. In particular, I enjoyed hearing about two new patients in Northern California who’ve benefited from being insured. They came in with life-threatening cancer: One, a mother with a uterine malignancy, and the other, a young man with a testicular mass. Both had gone years without medical care because they were unable to afford it. And now – thanks to medical coverage, early diagnosis and successful treatment – both will live.

But expanding access to health insurance is only the first step. Improving health care delivery is the next step in this journey.

With all the acrimony in our nation’s capital, bipartisan agreements are few and far between.

Medicare Advantage may be the one platform on which both parties can stand. Examining this program and why it has proven so successful offers us insights into where we as a nation might choose to go.

Medicare Advantage: A History Born from Necessity

Since the Medicare program was created in 1965, the federal government has been insuring citizens over the age of 65.This original form of Medicare, called traditional Medicare, was and remains a “fee-for-service” program. That means the Centers for Medicare and Medicaid Services (CMS) – the agency that administers the Medicare program – pays individual physicians for the services they provide to Medicare beneficiaries. Think of a service as an office visit, a test or a procedure. The price for those services is determined by the agency’s Physician Fee Schedule.

Beginning in 1978, Medicare beneficiaries had a second option. They could enroll in private Health Maintenance Organizations (HMOs) under a “risk contract” between CMS and the HMOs.

Over the next 25 years, many modifications to the original legislation were enacted by Congress. And in 2003, this program was renamed Medicare Advantage.

Unlike the government-run traditional Medicare option, the current Medicare Advantage program requires CMS to contract with private health plans on a prospective payment basis. These health plans then contract with individual medical groups and preferred provider networks to deliver the care that enrolled Medicare beneficiaries need.

Operating with a global budget and leveraging their capability to measure and report both quality performance and beneficiary satisfaction, Medicare Advantage plans have demonstrated increased care coordination and superior clinical outcomes.

As a result, these plans are becoming increasingly attractive to Medicare beneficiaries. In fact, 50 percent of new Medicare enrollees choose a Medicare Advantage option – enrollment in the program has tripled in a decade, and now exceeds 16 million beneficiaries. Some experts predict that Medicare Advantage enrollees will represent 30 percent of all Medicare beneficiaries by 2016.

Let’s explore three reasons why this program is so successful.

Reason 1: Beneficiaries Enjoy Abundant Choice and Predictable Costs

Medicare beneficiaries who select a Medicare Advantage plan obtain their care through dedicated delivery systems or provider networks.

In 2014, beneficiaries have an average of 18 Medicare Advantage options from which to select. And they can make their choice through the CMS website, which offers an online marketplace, including comparisons of quality and cost. According to recent Kaiser Family Foundation research, beneficiaries last year paid average monthly premiums of only $49 and most of these Medicare Advantage plans included Part D Drug coverage.

Unlike traditional Medicare, Medicare Advantage enrollees benefit from a limit on out-of-pocket costs. In 2014, the average out-of-pocket maximum for Medicare Advantage plans was $5,000. This gives enrollees – often living on fixed monthly incomes – more predictable costs and greater financial security.

Reason 2: Program Structure Provides Incentives for Superior Quality Outcomes and Service

The structure of Medicare Advantage creates incentives for providers to deliver comprehensive preventive services, achieve superior clinical quality and offer an excellent patient experience.

They know that satisfied beneficiaries will stay with the same plan and delivery system during the next annual selection process – with positive financial outcomes to boot.

And since government payments are based on the age of patients and the diseases they have — not the number of procedures performed — Medicare Advantage programs do best when the physicians and hospitals provide comprehensive preventive services, intervene early for patients with chronic illnesses, and avoid complications.

Although it’s difficult to compare overall outcomes, data from the National Committee for Quality Assurance (NCQA) show that Medicare Advantage organizations that score the highest tend to use a dedicated, integrated delivery system (including a multi-specialty medical group), and deploy a comprehensive electronic medical record (EMR).

Their results are in the top 10 percent of all programs in a broad set of areas, including managing blood pressure, reducing the risk factors that lead to heart attacks and strokes, and screening for cancer. In addition, their structure leads to more coordinated care, increased patient convenience, and greater access to technology, including both a comprehensive EMR and a variety of mobile device applications designed for ease of use by beneficiaries.

Reason 3: Five-Star Quality Rating System Holds Delivery Systems Accountable

An important feature of the Medicare Advantage program is the use of a Five-Star Quality Rating System.

Organizations participating in the Medicare Advantage program must report quality and patient satisfaction data to CMS on an annual basis. Based on this information, each Medicare Advantage program is awarded one to five stars. The Medicare stars program rewards the highest-rated organizations – the ones with superior quality and service results – with additional payments.

And with these dollars, they can invest further in the care of their members. Over time, this approach encourages every program to strive for higher quality and helps direct patients to those delivery systems that accomplish these goals. Most importantly, it results in patients obtaining even better medical care and more comprehensive preventive services.

Medicare Advantage Drawing Bipartisan Support, Sign of Program Success

For decades, liberal democrats have expressed antipathy toward the financing arrangements in Medicare Advantage. They’ve worried that this approach “privatizes” Medicare and allows insurance companies to benefit from this program by operating as “middlemen.”

But it is becoming clear is that the advantages of this program far outweigh the problems. By paying for value rather than volume – and by encouraging investments in superior quality, technology and coordination of care – the real winners are the Medicare beneficiaries and their health.

There’s increasing recognition across the country of our need to move from “fee-for-service” to “pay-for-value” payment models. And a growing number of democrats who were skeptical in the past are embracing this alternative to fee-for-service.

A recent bipartisan call to mitigate planned cuts in Medicare Advantage payments may be proof of this shifting perspective – whether or not those efforts are successful.

Learning from Medicare Advantage

A lot goes in to achieving superior performance, increased care coordination and improved quality outcomes.

For starters, care providers can’t allow patients to “fall through the cracks” when they receive treatment from multiple doctors or in multiple venues. Achieving this increased degree of safety requires a dedicated delivery system committed to seamlessly transitioning patients and their medical information from one provider or venue to the next.

It also requires the deployment and “meaningful use” of a comprehensive electronic medical record (EMR) that provides vital information at every point of contact. Having this information rapid treatment and allows gaps in prevention to be addressed immediately and by all physicians involved in the patient’s care.

And prospective payment creates incentives to provide appropriate preventive services, minimize complications and ensure patients recover as soon as possible.

The Medicare Advantage program offers a model for broader delivery system reform as we continue the journey from a fee-for-service/pay-for-volume “sick care” system to a pay-for-value/health-promoting approach.

Accountable Care Organizations – structured along the same principles of prepayment, prevention, care coordination, integration between primary and specialty care, and a commitment to measuring and improving performance – have the potential to move the country forward on the path to true health care reform. And other models are likely to be developed in the future.

We’ve expanded health insurance coverage for Americans in a year and improved health care for millions. Now, it’s time to focus on improving the process of care delivery in America.

Medicare Advantage doesn’t solve all of today’s health care challenges, but it is a good start. And we can learn a lot from its success.

Dr. Robert Pearl
CEO, The Permanente Medical Group
Chair, Council of Accountable Physician Practices

Reprinted with permission from

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What Kind of Ancestor Will You Be?

Is excellent good enough?

As physicians, we are trained to diagnose and treat disease. We dedicate ourselves to searching for cures and perfecting procedures that will restore the health of our patients. Over the last 50 years, we’ve made some remarkable progress. We’ve reduced the death rate from heart disease by 32.5% with a better understanding of primary and secondary prevention and advances in treatment. We’ve made similar progress in cancer care with better treatment options through radiation, surgery, chemotherapy, and genomics. We’ve changed an HIV diagnosis from a hopeless death sentence with limited treatment options to a manageable, chronic condition.

These truly excellent accomplishments in medicine have been life-changing for millions of people. But is excellent good enough?

While we have made great strides in clinical care, the American dream is faltering. Americans are more obese, more medicated and more in debt than at any other time in the history of our nation. One-third of our nation’s total health-care spending, about $750 billion per year, is wasted on unnecessary treatments, redundant tests, and uncoordinated care [1]. Health Care Reform will have limited impact on this waste. While the rate of increase of health care spending has slowed in recent years, the United States still spends 2.5 times more than most developed nations on health care [2]. U.S. health care spending is on track to reach $4.8 trillion in 2021, almost 20% of our gross domestic product [3].

This trend, compounded by one of the longest and most serious economic downturns we have ever faced has created a crisis for families, businesses, and communities that is tearing the fabric of the American dream. Health care is right in the middle of this crisis. The total cost of health care for an average family now exceeds $20,000 a year. When I began practicing as a surgeon, health care was at 10 percent of the GDP. Now it is at 18 percent of the GDP. These are investments health care have taken away from education, the environment, and infrastructure.

This has happened on my watch. I do not want an 18 percent drain to be the legacy of my generation. This insidious drain on families’ hopes and futures has to stop, and the trajectory in health care needs to change. Rather than causing despair and disappointment, it should be a positive enabler for a better life – physically, personally, socially, financially and psychologically. As an industry, we need the will and the resolve to create an inflection point and declare that excellent is not good enough.

Creating an inflection point to transform health care

It wasn’t too long ago when health care was centered around the doctor’s office or hospital. Physicians practiced with minimal support staff and subscribed to one journal. The problems physicians faced could be solved using the knowledge and skills they acquired in medical school. Patients went to the doctor’s office for all the information on their condition and for treatment. That was the industrial age of medicine.

Today, health care is much more complex. Physicians are accountable for a population of patients, whether the patients come in to the office or not. There are now more medical journals than physicians could possibly read or digest on their own. What physicians learned in medical school is no longer sufficient. Often, patients have extensive information about their diseases from Google searches and online patient communities like PatientsLikeMe. In these instances, physicians still play an important role as a trusted source – helping patients interpret the information they find and providing more context, evidence, and nuance so that patients and physicians can make informed decisions together. However, make no mistake, the locus of information and “power” has moved from the doctor’s office to the patient.

We’re forging the information age of medicine. In order to be effective, we must optimize the use of information, technology, tools and teams. We need to turn masses of patient data, science, and clinical evidence into clinical knowledge. This information must be available to patients, physicians, and care teams. And they must have access to technology and tools to make the right thing easier to do. Physicians and care teams should have clinical decision and panel support tools that not only put the latest evidence at their fingertips, but also enable them to provide personalized care to each patient.

Transforming health care into a learning industry

We need to make health care a “Learning Industry.” The inflection point won’t come from one bright leader or one superb organization. We have a wide range of inter-connected issues in health care. We can spend time blaming different parts of the industry for these challenges, or we can realize that we can influence and accomplish much by working together. We need talented people who have deep expertise in specialized areas and at the same time an understanding of the broader impact of their actions. We need to draw from all parts of the industry; harnessing our collective knowledge from the practice of medicine, the pharmaceutical industry, and medical research; as well as from a variety of disciplines, such as policy, economics, and engineering. We can only achieve this inflection point by being interconnected, by working collaboratively, by learning together. We can’t treat our way out of this crisis, we must learn our way out of it.

Health care needs to become a community that embraces measurement, comparison, acknowledgement, learning, and improvement. As physicians, we believe, and have every intention, that we are providing the highest quality care to our patients. But it is only when we measure and compare our performance that we can see if we are truly providing the best possible care or if there are gaps in our preventive care and treatments. Once we have the appropriate data, clinical guidelines, and resources, we can engage patients and close those care gaps. And then we won’t just believe we’re providing the best care; we’ll have proof. We must have the openness and spirit of collaboration to achieve this. We must also be willing to share our failures as broadly as our successes. As physicians, we often hear about the latest breakthrough treatments or procedures, but we are much less likely to hear when those procedures produce complications in the long-term.

Our greatest responsibility is to be good ancestors

As I look back on my career, I consider the legacy I will leave behind for my 6-year-old grandson and the generations that follow. Today, we talk about accepting “accountability” in health care for a patient population, across the continuum of care. Dr. Jonas Salk, inventor of the polio vaccine and one of the most important innovators in medicine, took a longer-term view of what accountability meant. Dr. Salk asserted that “Our greatest responsibility is to be good ancestors.”

By building a learning coalition, we can learn from challenges and successes across the health care industry. The innovations that can transform our industry are out there. They’re just not everywhere yet. We need to become rapid learners through connectivity, openness, discipline, collaboration, and a sense of curiosity. Organizations like the Institute for Healthcare Improvement, Alliance for Community Health Plans, American Medical Group Association, and Department of Defense are fostering connections among health care organizations as well as other health care stakeholders, and their efforts are gaining momentum.

The American dream is faltering. We need to restore hope and give some of the 18 percent back to the American people.  Ultimately, within each of us must be the resolve. Resolve is not about hard work and dedication. Those are table stakes. It’s a relentless focus on the reality and the mission. The future is going to be tough, but it’s in our hands. We have the ability and talent to create that inflection point that transforms health care and restores the American dream for future generations. Our patients, families, and communities are depending on us.

What kind of ancestor will you be?

Jack Cochran, MD, FACS, is executive director of The Permanente Federation, headquartered in Oakland, California.

This commentary was originally posted on The Health Care Blog.

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The Future Of Health Care: A Survival Guide

I’m often asked what the future holds for health care. I don’t have a crystal ball, but I know two things are certain.

In the future, health care providers must champion two of Michael Treacy and Fred Wiersema’s value disciplines to survive.

First, the practice of medicine is – and always will be – a great profession. It’s an honor to improve and save lives. Second, doctors and hospitals will be forced to change their practices before they’re ready. For patients, this new reality will be positive. For providers, it is likely to be uncomfortable.

In the book “The Discipline of Market Leaders,” authors Michael Treacy and Fred Wiersema note the companies that attain and sustain market leadership excel in 1 of 3 value disciplines:

1. Customer intimacy (service/relationships)
2. Product leadership (innovation/R&D)
3. Operational excellence (efficiency/effectiveness)

The authors emphasize that the best organizations make a choice of one discipline and, with rare exception, can’t excel in two. Health care will need to be that rare exception in the future. One discipline won’t be enough for providers. And once the transformation to two is complete, the result for patients will be better medical care at lower prices.

Today’s provider landscape

Although overlap and exceptions exists, most patients receive care in 1 of 3 settings:

1. Community-based providers (local doctors and hospitals)
2. Academic medical centers (university clinics and hospitals)
3. Integrated delivery systems (Mayo Clinic, Virginia Mason, Kaiser Permanente, etc.)

The typical doctor in the community works alone or in a small group. Economies of scale and research opportunities aren’t available, but the structure is conducive to the value discipline of “customer intimacy.” Patients are loyal to their local doctor. The office staff knows every patient by name and some doctors continue to make house calls. Insurance companies have little choice but to pay the higher prices community providers charge.

Academic medical centers, by contrast, have relied on “product leadership” above all else. The buildings are huge and residents rotate clinical services every month. But patients come in search of the latest medical technologies and newest machines. Sometimes these technologies prove effective, but they often cost more without improving outcomes. Insurance companies have few alternatives but to include these higher priced venues as a care option for patients.

Integrated delivery systems have taken a different path, focusing mainly on “operational excellence.” They typically include many salaried physicians from a variety of specialties. They practice together in large, centralized medical buildings. The combination of greater size and fewer locations succeeds in lowering their costs. However, their structure can make service feel less personalized.  

The provider landscape is changing quickly

Everything changes. Today, doctors and hospitals face pressure from every direction.

Health insurers are narrowing networks – offering patients a smaller pool of doctors and hospitals in exchange for lower premiums. Customer intimacy or product leadership alone won’t be enough to guarantee doctor or hospital inclusion. With the introduction of health insurance exchanges and price transparency, the shift to lower cost providers will accelerate.

Payment models are evolving, as well. The traditional model was designed as a fee-for-service system that rewarded volume, not outcomes. Organizations like the Pacific Business Group on Health (PBGH) are rapidly transforming that payment model. With PBGH, rather than generating a bill for hundreds of individual pieces, a single price is paid – be it for a total joint replacement or the totality of care given to a patient with diabetes. Those hospitals and physicians that charge more are excluded.

Meanwhile, health care providers are increasingly being measured by patient satisfaction.

Physician-review sites like ZocDocHealthgrades and RateMDs offer patients detailed information to assist them in their choice of doctors. More and more insurance companies are paying based on patient satisfaction.

The prescription for survival

In this new reality, excellence in one value discipline won’t be enough.

Community doctors and hospitals will need to become more efficient. They will need to create Accountable Care Organizations or find other ways to develop economies of scale. Simultaneously, they will need to focus on helping their sickest patients manage health more effectively. Take, for instance, the Camden Coalition of Healthcare Providers, which provides home visits and house calls to the community’s “worst of the worst” medical cases, cutting their $1.2 million in hospital bills by more than half. If community providers don’t figure out how to lower costs, they will be excluded from these new narrow networks and risk being driven out of business altogether. Most doctors who chose community practice did so, in part, for the autonomy. It is unclear how many will be willing to modify their practice styles for the greater good.

Academic medical centers will need to become more business savvy and achieve operational excellence. Already, we are seeing an uptick in doctors pursuing MBAs, but improvements in performance will demand the commitment of all. Many physicians who chose academia for their careers may refuse to divert time and energy away from research and teaching to champion a second value discipline. However, these doctors must learn to balance their academic pursuits with business interests, such as: learning to value supply chain management, improving operating room turnover and increasing collaboration among clinical services for hospitalized patients. Until they do, the care they provide will retain excess costs.

Integrated delivery systems will need to emphasize customer intimacy – as much as they do operational excellence and quality outcomes – to survive. As narrow networks lower prices, these integrated delivery systems risk losing membership and being stuck with high fixed costs. Continued success will depend on high patient satisfaction scores. But will these salaried physicians realize it in time?

Necessity often drives innovation. As health care becomes more competitive, patients will have more choices for improved medical care at lower prices. But while patients will welcome this new reality, doctors and hospitals will find embracing a second value discipline uncomfortable. As economic and competitive pressures increase in the future, providers of medical care will be required to go beyond their comfort zone. Those that fail to do so will be left behind.

Dr. Robert Pearl
CEO, The Permanente Medical Group
Chair, Council of Accountable Physician Practices

Reprinted with permission from

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Dr. Gene Lindsey: Atrius Health’s No Loss Pioneer ACO Results

Those of you who follow the journey of accountable care probably heard that Atrius Health was one of two of the Centers for Medicare and Medicaid Services’ Pioneer Accountable Care Organizations (ACOs) for 2012 that would incur a shared loss.  In full, 14 ACOs showed a loss, but 12 did not share in the loss because of the financial models they chose. There were nine Pioneers who chose to move to the Medicare Shared Savings Program– a similar program with less risk and less potential upside–or to leave the program.

We are very pleased to be able to share that, upon recalculation of the numbers at the end of our 12-month performance year, Atrius Health does not have a shared loss in the first performance year of our Pioneer ACO model. The financial plan that that we selected with Centers for Medicare and Medicaid Services (CMS) for our first 12-month performance period ended on March 2013, and our final numbers show that our loss was .98%, not the previously reported 2.1%. This loss is small enough that it is considered within the statistical range of error.  CMS publicly reported findings before our full performance year number had been finalized.

This news underscores what those of us working in this space already know:  that we must give any accountable care venture time before trying to assess the overall effectiveness of the model.  Some of the articles that came out upon the release of CMS’s initial findings implied that the Pioneer ACO Model is not accomplishing its means. (Some of those same voices are the ones that have been continuously attacking the Affordable Care Act since the moment it was conceptualized.)  But the reality is far more positive:  In its first year, the Pioneer model produced a savings of nearly $33 million to the Medicare Trust Funds and demonstrated overall quality performance better than the national average for all 15 clinical quality measures for which comparable data are available. As strong supporters of the ACO model of care, it is important that the program in total be successful, so it is good news that the program was net positive in its first year.

I feel good about our performance in the Pioneer program this year. To understand the initial confusion on the findings, it might help to know something about the mechanics of our Pioneer ACO financial result.  They are complicated because the mechanics are built on continuous improvement.

First, your progress is measured against a budget that starts with the actual experience of weighted total Medicare expenses for the prior three years for the patients for whom you provided much of the care during those years. The patients have been attributed to your ACO because your medical practices provided most of their primary care.

That is the easy part. Then the formula adds in growth based largely on a comparison to a national matched population to arrive at your budget.  The final calculation of actual shared expense and loss includes factors that affect the amount of risk in your particular financial option, such as the percentage of sharing with Medicare, a risk cap, and a noise level above or below which nothing is shared. Because of the timing issues with CMS delivering data in the first quarter this past year, we were allowed a one-time option to shift our first year to the 12 months ending March 31, 2013, for settlement purposes. The calculation will become even more complicated starting next year when the 33 quality measures that attempt to capture patient experience, care coordination and patient safety, preventative health, and healthcare for the at-risk population (largely related to diabetes and CAD) are factored into the sharing percentage.  For this first year, 100% quality was achieved by reporting on all of the measures, which sounds simple, but actually involved a tremendous amount of work to establish the right fields in our EPIC system for counting and a lot of manual chart review in some cases.

It is our opinion that even “losses” at this stage constitute an investment in the future. We believe we have to make these changes to meet the challenges ahead of us because we know that federal reimbursement will continue to fall in the future. Even tougher will be the relatively flat reimbursement from our commercial insurers.  Our Board was very positive in its support on the front end. We prudently reserved in 2012 for a four million dollar “loss” because we knew that it would be hard to beat a budget of less than $900 a month for each Pioneer patient. We started the year constructing the programs that by mid-year were making measurable improvements. We are now running at rates that are impressive and that suggest that by next year there is the possibility that we will have improved care to the point that we are positive financially as well as in quality.

Not to negate our first year quality measure:  as reported to us by the CMS Innovation Center, the quality of our care was “spectacular.” As measured against the other Pioneers (whose combined performance far exceeds the national average), we had five metrics that were among the highest and 23 metrics that were greatly above the mean

In short, as I remind our staff and physicians, we are in a five-year process to improve care–not a one-year contest to see how much money we can make.  I hope that those of you participating in accountable care ventures pay attention to this message and work to stay the course.

Dr. Eugene Lindsey
President and CEO
Atrius Health and Harvard Vanguard Medical Associates

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The Importance of Healthcare Hand-offs

The passage and implementation of the Affordable Care Act has made health care a topic of everyday conversations around our dinner and conference tables. However, most of the discussion is political and not about whether our healthcare system works for its intended audience–patients.

An important story lost in the clutter of healthcare politics is the patient’s experience when he or she leaves the hospital and returns home. For the millions of Americans who are too often readmitted to the hospital, the story does not have a happy ending. However, with a common-sense change in the delivery of health care, we can improve these health stories and save money in the process. What we need to do is better coordinate the hand-offs that go on all across our healthcare system. And we know this because, for millions, these hand-offs are being done successfully.

So what is the problem? How and where does the fumble happen? After a patient is admitted to the hospital with a serious condition, he or she is treated by more than a dozen physicians, nurses and other providers, many of whom do not seem to speak to each other as they come in and out of the room asking the same questions over and over. The patient is then sent home without clear instructions and maybe not even feeling better. The patient is confused and alone–left to navigate a complex maze of choices on his or her own. This fumble is our healthcare system’s dirty little secret; it is the way the healthcare system works for too many Americans.

But, millions of patients in pockets across the country are telling a dramatically different story. A system exists that eases them through the transition of hospital to home. There is no fumble with these patients because care coordination ensures a smooth handoff.

Imagine a patient who is sent home from the hospital in a coordinated model. Before the patient even leaves the hospital, a care team springs into action. At an appointment with the care team, the patient and any family caregivers are given written, clear instructions on whom to call if they have questions or if the unexpected arises before their follow-up visit. The care team calls the patient the day before the appointment to reconfirm.

At the follow-up visit, the team works to ensure the patient’s total care needs are addressed. A pharmacist reviews all medications the patient is taking, including herbal supplements, over-the-counter medication and medication prescribed before the patient was in the hospital. A social worker and case manager address coordination of various health insurance coverage plans, as well as emotional, social and other issues that may impact a patient’s recovery. A physician reviews the hospital stay and the patient’s medical history and provides personalized education for the patient. The entire physician-led team generates a summary of what they have done and sends one complete note to the patient’s primary care physician.

To be sure, this doesn’t happen every time a patient goes to the hospital across the United States. But, for the more than 18 million Californians our physicians treat, care coordination is no secret.

So how do we create these smooth handoffs all across America? First, we have to get rid of fee-for-service payment as a dominant payment model. In fee-for-service, the physician receives a payment for each procedure done or test ordered. This system of payment simply encourages more tests and more procedures, without an eye on the most effective, high quality care for a given patient. This model must go.

Second, we have to pay for the type of care we want. If we want team-based, forward-thinking, prevention-focused health care, we have to pay doctors to work in teams, think ahead and keep their patients healthy. Instead of paying each individual physician for each medical procedure performed, Medicare and other payers should make defined payments to physician organizations based on quality, taking into account who they treat and how sick their patients are — the higher the quality, the higher the pay.

Finally, we have to look for and encourage what works in health care. A number of physician payment experiments are currently under way, including Medicare and commercial accountable care organizations (ACOs) and patient-centered medical homes. Testing these models to determine what works is incredibly important. In addition, attention must be paid to Medicare Advantage, where care coordination is currently under way and producing better outcomes for patients.

Coordinated care is no secret for millions of patients. But we must continue to work to ensure that care coordination is a reality across the United States. We need to listen to the patient’s stories, work to ensure that the dirty little secret of health care is no more and ensure the smooth hand-off from hospital to home.

Donald H. Crane is president and CEO of California Association of Physician Groups, which represents groups in 20 states with more than 60,000 members providing care to more than 18 million Americans.

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Clinical Integration: Lessons from Dean Clinic

Dean Clinic has been described as a present-day Accountable Care Organization (ACO) and a model of clinical integration. We’ve also been called a “structurally integrated organization,” an “economically integrated organization,” and even a “technologically integrated organization.” We are admittedly all of these things because we chose to pursue “better care at a lower cost”—the value path—long before the ACA was passed.  But there are even more important types of integration than these to succeed as a high-performing Accountable Care Organization, as we have learned:

Lesson 1: Shared Accountability Is Far More Important than Structural Integration

One of the common misconceptions about an organization’s ability to succeed in accountable care is the belief that vertical and structural integration is critical to achieve synergy. The Dean/SSM Healthcare of Wisconsin partnership illustrates that this is not necessarily the case. These two separate corporations have worked shoulder-to-shoulder for over nearly 100 years with a common purpose and shared vision for excellence and value-based care—a virtually-integrated system from a structural standpoint. While we have, in recent years, become more structurally integrated via joint-ventures, these forms of partnership have not nearly been as important as the alignment of our value-based cultures. We have a common vision toward value, even at a time when financial incentives encouraged us to pursue a volume-based path. Together, we chose not to divide a fixed and shrinking revenue pie between us and instead have found ways to share gains, risks, higher-margin services, and investments to improve our performance.

There are three accelerating and competing structural integration verticals emerging today, each aimed at dominating markets: health plans that are seeking to acquire delivery systems, hospitals that are moving to employ doctors, and physicians that are embracing full-risk and vending downstream services to hospitals and others. In our view, the ability to become a high-performing accountable care organization is less about which of these models is preferred or even where their journey began, but rather more about achieving a state that represents a “team of equals.” In our organization, each effort to improve patient satisfaction scores, raise ambulatory or core hospital quality measures, or improve efficiency involved the attention and expertise of physicians, hospitals and health plans in partnership. In short, it’s the alignment over a common set of goals, the singular focus on a common set of metrics, and the power of shared accountability that is far more important than structural integration in driving our system’s performance.

Lesson 2: Aligned Incentives Are Far More Important than Economic Integration

What motivated Dean’s journey down the value-based path was our recognition at one point in our history that we had a “foot on a dock” (volume-based revenues via fee-for-service payers) and a “foot in a canoe” (capitated payments via our owned health plan)—and the recognition that the dock was burning and the canoe was leaking. Ultimately, we chose to pursue the value path and deliver better care at a lower cost in earnest for all our patients, regardless of payer.  Many believe that we’ve had the freedom to pursue value because we’ve owned our own health plan (whereas others are starting their journey standing on a burning dock with no canoe in sight). While there is some truth to that premise, we would argue that Dean’s transformation to value had more to do with the fact that the bearing of risk catalyzed a paradigm shift in our approach to care and a transformation of our operations. If it were not for our economic integration, we would not have had the toolkit of processes, technologies, strategies, and innovations to maximize value-based care that we have today.  However, at the end of the day, it’s the toolkit along with aligned incentives (regardless of payer) that is far more important than the economic integration.

Fast-forward to present day and we find that we have stepped off the burning dock and have patched the canoe. While our health plan is strong and growing, we have pursued gain-sharing and risk-sharing payment methodologies with most of our other payers, including Medicare via the Shared Savings Program (MSSP). In our view, the beauty of the Medicare MSSP, Pioneer, and Bundled Payments programs is that they offer health systems the opportunity to step into their own canoes.  Ultimately, our desired end-state is to not only be clinically accountable, but to be economically accountable for all our patients, and to have most, if not all, of our incentives aligned toward value over volume.  This alignment of incentives is not only important in the payer-provider relationship, but is even more important between a provider organization and its doctors. We’ve learned quite clearly that you can’t pay doctors for volume when your organization is paid for value.  ACOs must also learn how to re-design physician compensation models and align incentives from the very top to the very front line of our organizations.

Lesson 3: The Ability to Compile, Compare, Analyze, and Report Information Is as Important as Technological Integration

Along with shared accountability and alignment of incentives, two of the most crucial drivers of the transformation at Dean have been our willingness to embrace the use of technology and to use data effectively to drive decisions and motivate change. Implementation of an electronic health record is essential but not sufficient to become a high-performing health system. Likewise, meaningful use of EHRs is essential but not sufficient to be “accountable” in the future. We would argue that our greatest organizational success will only be achieved when we “optimally use” our technologies and integrate them into the very fabric of our care-delivery model. ACOs must make sure that we are using EHRs to their fullest potential to influence improvement in quality and maximize preventive screenings, service enhancements, patient adherence or cost reductions.

But even that will not be enough to be sufficiently high-performing in the world of accountable care.  From our vantage point, the ability to compile, compare, analyze, and report information is the most important component of the world of integrated health information technology and data. As Dean has evolved from a system of volume-based care to population-based care, we have vigilantly benchmarked our performance against other organizations, shared un-blinded comparative data with clinicians regarding service, quality and cost, and transparently reported data to our markets as a means of growing our practices and competing in the world of health insurance exchanges. We’ve also developed a comprehensive “big data” data-warehouse and analytics shop so that we can predicatively model clinical information, identify areas of quality/safety/cost concerns, and assess variations in practice patterns. While we struggle every day with the accuracy, transparency, format, and availability of data today, we’ve invested heavily in data creation, analysis, reporting and modeling at Dean because it is quite clear to us that data will be king in the world of value.

Dr. Craig Samitt is President and CEO of Dean Clinic. He may be reached via

The original version of this article was published by Accountable Care News, December, 2012.

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