Long before the new health reform law passed, Bryan Mills, CEO of Community Health Network, declared the hospital chain would turn itself into an accountable care organization by integrating with physicians.
Now that such an idea is codified in law, it’s only fueling Mills’ mission.
Community Health now has about 550 physicians, either on its payroll or committed through integration contracts, who have some of their pay hinge on measures of quality and communication.
Community had a head start on other local hospital systems because it kept the primary-care physician practices it acquired in the 1990s, when the managed care concept (a forerunner of accountable care) was all the rage. Today, those practices employ 200 physicians.
But in less than two years, Community has added another 350 doctors, including specialists in cardiology, pulmonology and diabetes care. Health reform has only fueled the drive for physicians and hospitals to link up, Mills said.
“One of the things that health reform does is, we all look a little prettier to each other than we did a few months ago,” he said in an interview after participating in a panel discussion of health reform at the IBJ Health Care Power Breakfast on Sept. 10. “We’ve brought many, many physician groups on. We’re talking to many others.”
Accountable care could be game changing—but also challenging—for hospitals, Mills said.
Accountable care calls for insurance plans, such as the federal Medicare program for seniors, to pay hospitals and doctors to take responsibility for the total health of a specific population of patients, rather than paying solely based on the volume of procedures they perform. In health care jargon, accountable care seeks to pay according to “capitation” (number of patients) in addition to “fee-for-service.”
The federal Medicare program has proposed contracts with accountable-care organizations that would be paid fees for each service, but would also be offered a bonus if the doctors showed they provided high-quality care and saved Medicare money. Under the health reform law, these “shared savings” contracts will begin in January 2012.
There’s also wide room for doctors to negotiate other payment arrangements around the accountable-care concept, both with Medicare and even more so with private health insurers.
“It’s the fact that we’re responsible for the health and well being of patients, even when they’re not in our facilities. That’s huge. And I’m not sure we’ve all totally committed to the fact that we have to do that,” he said.
One of the biggest ways accountable-care organizations could save money is to reduce patients’ need to be hospitalized. Skeptics think hospital chains are unlikely to aggressively reduce hospital visits. But Mills disagreed.
“As a health system, six times as many patients go into facilities that we own that are not a hospital every day than go into that hospital. And most patients that go into a hospital are not financially viable for us,” Mills said. “So we don’t have the incentives that a lot of people believe we do to have patients in the hospital.”
Mills expects accountable care to succeed where managed care failed because there’s a greater focus on quality with accountable care, whereas managed care turned into a drive merely to cut costs.
“The question is going to be, will we be better at doing the right thing for the patient than the HMO companies were in the past?” he said. “We believe we will be, because the issue is, we’re going to put in place adherence to quality standards that we now have an objective to include.”