Given the complexity of the transition to managing risk, launching an ACO or a CIN requires an ongoing effort to achieve high-performing operational status. This effort unfolds in five overlapping stages lasting up to eight years.
Health systems should use the following guide to ensure their strategies are on track and will achieve the intended results.
1. Developing the value-based strategy (six to eight months)
Organizations too often underestimate the importance of this essential first stage, which is to develop a clearly defined, fully fleshed out strategy with appropriate benchmarks and a firm organizational consensus. Organizations should resist the urge to advance incrementally, thinking they can best move toward taking on risk by first gaining some experience and seeing how it relates to goals. Such an approach often results in the organization assuming risk before it is fully prepared to manage it. Instead, the focus should be on developing a plan that documents clear competency requirements, including agreement on clinical governance, network design, care model design, goals for consumer experience, technology and analytics, and the financial model.
2. Forming the ACO/CIN (10 to 12 months)
The costs of creating an ACO/CIN are likely to be minimal and incremental initially, relative to the organization’s top line. Much of the costs will involve reallocating staff, thus requiring no significant net new investment. In this stage, the organization should forge new connections among its clinical, financial and revenue cycle teams to identify issues around documentation or gaps in care.
In some cases, existing FFS infrastructure and revenue cycle management resources may provide the foundation for the value-based contracting and population health finances analytic team. The organization also may consider hiring an individual with health plan experience to start a team focused on analyzing and evaluating insurance impacts and value metrics. To keep health plan partners “honest,” the ACO/CIN will require actuarial capabilities to ensure targets for cost of care and administrative allocations are appropriate. Initially, the organization may want to engage a third party for this purpose, but the goal should be to bring this capability in-house.
Health systems have tended to sponsor ACOs led by primary care physicians, but as they have taken on bundled payments for specialty care, such as end-stage renal disease, they are increasingly developing specialty ACO models. As the clinical networks mature, providers will add high-value primary care and specialist practices and more efficient post-acute care sites. Optimizing and refining the clinical network will be an ongoing activity in an ACO’s development journey.
3. Generating initial cost savings and quality improvements (12 to 24 months)
At this stage, health systems begin implementing ACO/CIN programs for reducing costs. Such programs will require specific, measurable targets backed by performance reporting systems, with aligned incentives to ensure management is motivated to achieve results. To be able to meet the targets, organizations must move their revenue capture teams from the back office and train them with new skills in value-based forecasting that can help them both optimize financial performance and communicate more effectively with clinical leaders. At this stage, the health system’s investment in episode analytical capabilities plays a critical role in driving cost savings and quality improvements.
If a health system’s strategy includes participation in bundled payments (e.g., focused on hip and knee replacement, diabetes or maternity care), the organization also will require dedicated teams of specialists around the specialty procedures. Targeting and establishing clinical guidelines for high-risk patients is an early priority, with the addition of low-cost sites of care in the clinical network, and the development of patient portals for messaging and the transmitting electronic health record (EHR) data.
4. Managing the transition to risk (24 to 48 months)
Most value-based contracts are based on a plan to reduce costs by eliminating inappropriate utilization, lower prices and increase market share by enhancing value to the consumer and reducing out-of-network referrals for care. Most ACOs and CINs, except for a handful of established, well-integrated medical groups in favorable markets such as South Florida, should expect to invest for several years before seeing sustained reduction in
the cost of care.
5. Performing as a risk manager (five to eight years)
This stage involves an ongoing focus on continuous performance improvement and geographic expansion to include additional populations. It will require the development of a new level of data sharing and collaboration among physicians and other clinicians to obtain optimum quality and financial results.
See related article: Assembling the essentials for successful population health management
