Prompted in part by the Affordable Care Act, health care providers nationwide are beginning to rally behind a novel concept: being rewarded for keeping people out of the hospital.
Under a provision of the health care law, doctors, hospitals and other providers who serve Medicare patients now have the option of forming accountable care organizations (ACOs), which present a framework for ultimately replacing the fee-for-service system with a pay-for-performance arrangement.
This shift represents one of the most significant changes to affect health care providers since the law was enacted, panelists said at an April 26 roundtable, “Can Hospitals Make the Difference,” hosted by the Fairfield County Business Journal and sister publication the Westchester County Business Journal.
Providers or groups of providers who serve at least 5,000 Medicare beneficiaries were able to begin applying for status as ACOs under the Medicare Shared Savings Program in January, with the first ones officially starting in April.
The private sector has also joined in the movement, with a number of regional medical care providers forming ACOs for their commercially insured patients.
Whereas previously, more procedures would mean more revenue for doctors and hospitals, providers that choose to form or join an ACO are encouraged to avoid any unnecessary duplication of services and to prioritize patient satisfaction, resulting in shared savings for the ACO and the insurance provider.
“The financial incentives that were structured in a fee-for-service environment I think just led us down the path of, ”˜The more stuff you do, the more money you make,”™” said Dr. John Murphy, CEO of Western Connecticut Health Network and one of five panelists.
Now, he said, “We have to focus and celebrate empty beds in a hospital as opposed to full beds in a hospital. The incentives have to lead the way … I think the incentives have to reward keeping people well.”
Also speaking at the panel were Dr. John Crowe, president of Orthopedic and Neurosurgery Specialists P.C. in Greenwich; Jon Schandler, president and CEO of White Plains Hospital in Westchester County; Dr. Simeon Schwartz, CEO of WestMed Medical Group in Purchase, N.Y., and Mike Weber, president and CEO of Health Quest in LaGrangeville, N.Y.
The formation of ACOs ”“ a topic that was covered on just seven of the 900-plus pages of the Affordable Care Act ”“ is “fundamentally reorganizing the entire health care delivery system,” Schwartz said.
One year ago, less than 1 percent of WestMed”™s patients were covered by some form of shared savings model. By July, Schwartz projected between 40 and 50 percent of the practice”™s patients will fall under that category, a transition he said he had expected to take “decades.”
Similarly, Schandler said every new managed care contract entered into by White Plains Hospital is a pay-for-performance contract, with built-in incentives that are based on the quality of care, patient satisfaction and efficiency.
The Affordable Care Act has prompted other changes as well, namely the consolidation of smaller practices into larger medical groups or hospitals as efficiency becomes paramount.
“It makes it much more difficult for us to adapt in the same way than the group that has 200-plus doctors or a hospital because we”™re under the same pressure to increase our efficiency, to increase computerization,” Crowe said.
However, Crowe said the trend might have been inevitable. Asked whether the era of small practices is drawing to a close, he said, “I think the answer is yes, but again, I”™m not sure it”™s because of Obamacare.”
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